45 minute read
Shopper Sense
Health in the spotlight
Expect protective health and wellness priorities to shape 2022 consumption habits
afteR neaRLy two years of living amidst a pandemic and its associated living and working restrictions, consumer preferences, priorities and behaviours have drastically shifted to align with their new habits, budgets and health and wellness needs.
In contrast to the whirlwind nature of COVID-19, consumers are being very strategic with their consumption choices. These consumers are seeking out experiences that offer personalization, convenience, and products that promote specific health benefits and/or ingredients. And 52% of Canadians are planning to increase their efforts towards living a longer, healthier life.
It all starts with understanding the baseline state of total health and wellness as it stands today. Despite mass vaccination efforts across countries, the world is still faced with a rapidly-spreading pandemic, with millions still being infected and impacted by COVID-19. However, the virus is just one force driving change in the global health and wellness landscape. In Q4 2021, NielsenIQ identified a five-pillared hierarchy of health and wellness needs in its Global Health and Wellness report, those being:
• Protective: Protecting myself and/or my family members from immediate health threats. • Preservation: Improving my and/or my family’s current physical or emotional wellbeing and connections. • Aspirational: Proactive actions to achieve and maintain specific health goals, or helping to avoid ailments in the long term. • Evolving: Seeking out the latest alternatives or developments to continuously meet my and/or my family’s health and wellness goals. • Altruistic: Improving the world around me by advocating for environmental, ethical, humanitarian and/or philanthropic causes.
When looking at how Canadian consumers ranked these needs in terms of importance, protective needs were rated highest, by far, with 71% of Canadians prioritizing protective health actions and needs versus 63% of global consumers. Since Canadians are highly concerned with protecting themselves and their families from immediate health threats, it’s important for retailers to address these concerns through enhancements to their in-store and online shopping experiences, and for manufacturers to clearly educate health and wellness benefits and ingredients on product packages and through online attribute data.
Given the dramatic, pandemic-related boost in online shopping, individual health needs and concerns have been having a greater impact on shoppers’ purchase decisions versus brand loyalty. An example of this shift in behaviour: 81% of grocery searches on Amazon.com are unbranded, and we expect this to accelerate.
Shoppers are not only concerned with pandemicrelated threats, but also factors such as allergies, intolerances, specific eating regimens/diets, and corporate sustainability efforts, and are seeking products that fit their priorities. To tap into the large segment of consumers focused on protective needs, it’s crucial for manufacturers to provide shoppers with thorough product attribute information online as well as on product packages and labels.
As shoppers visit brick-and-mortar stores with their omni-altered mindsets, they’re expecting a similar experience in terms of convenience and broader assortments. Both online and offline retailers need to ensure they’re offering diverse product assortments grouped by benefit (i.e. low-calorie, keto-friendly, cruelty-free) to capture the growing segment of attribute-first consumers. For brickand-mortar retailers, it’s no secret that attracting shoppers has been a challenge due to COVID-19 concerns, so promoting a safe, sanitary and frictionless in-store experience will be key to capturing dollars as we combat rising infection rates. In addition, online and offline retailers should continue to focus on delivering positive and seamless omnichannel experiences that encourage shoppers to make repeat purchases. Lastly, expanding omni capabilities should be a top priority as click-and-collect and delivery gain further traction while consumers look to cut down time spent in-store shopping. CG
bread
Abeloved staple, bread is on everyone’s weekly grocery shopping list. However, Canadians’ needs and tastes are evolving, so grocery retailers have to keep up with the latest trends. Here’s a look at what’s heating up in the bread category: Growing appetite for all natural: Across many food categories, consumers are looking for products with natural ingredients—and pantry bread is no exception. In fact, “no artificial flavours and colours” are among the top purchase drivers of pantry bread consumers, according to Bimbo Canada’s latest category research. In addition, claims that reinforce trust in the product, such as “simple ingredients” and “non-artificial,” are seen as most important to consumers and will likely encourage trial. Post-pandemic bread fatigue: During the pandemic, many Canadians became home bakers, and baking bread was one of their favourite activities. Now, the stay-at-home bakeoff is waning and many consumers are returning to the convenience of pantry bread. Recent data from Nielsen suggests an element of post-pandemic “bread fatigue,” which makes it critical for the category to showcase its potential to bring excitement back to the classic family favourites. Making more meals at home: From homeschooling and working from home, to ‘staycations’ and at-home entertaining, Canadians continue to spend a lot of time at home. When it comes to mealtimes, Canadians are trying new recipes and using basics to find quick and easy meal solutions. As consumers’ eating habits continue to evolve, the relevancy and motivation for at-home preparation and consumption of bread will be critical.
Product Spotlight
Dempster’s is bringing excitement to the bread category with two new Nature+ Breads: Dempster’s® Nature+ Honey Wheat Bread is baked with a touch of real honey and wheat bran. Dempster’s® Nature+ Butter Bread is a slight twist to the family favourite of classic white bread with a light touch of real butter. Dempster’s® Nature+ Breads bring a delicious twist on the everyday classic and can be enjoyed in many fun, creative ways for the entire family to enjoy— whether it’s breakfast, lunch or even snacks. As always, Dempster’s® Nature+ is baked with no artificial colours or flavours, and is baked in Canada.
Shopper research
Our exclusive research on how Canadians size up grocery shopping
By Shellee Fitzgerald Illustrations by Kara Pyle
Inside the minds of shoppers
in these fast-changing times, getting a handle on shoppers is no easy feat, but we’re determined to try. Once again, we’ve teamed up with the research team at EnsembleIQ (Canadian Grocer’s parent) to bring you the 2022 Grocery IQ Study: Taking Stock of Grocery Shopping Attitudes and Behaviours. In this, our second-annual study, we surveyed more than 1,000 shoppers across Canada to better understand their preferences and habits. We asked shoppers about everything from loyalty programs and local products to satisfaction with online grocery services and even if they think the store is fun to shop. Here’s what we learned:
WHERE THEY SHOP
Three-in-four (77%) shop the same grocery store each time, but of the shoppers who do not, a majority are shopping across 3+ stores.
# of grocery stores regularly shopped (those who do not shop the same store each time)
2 stores 21%
4+ stores 26%
(34%)
3 stores 53%
Overall, fewer shoppers are shopping at more than three stores compared to the prior year.
Significant increase /decrease vs. previous year at 95% confidence level Values in brackets reflect previous year figures
HOW THEY DECIDE WHERE TO SHOP
Most important factors to grocery shoppers when determining where to shop
Product pricing Product freshness Products needed in-stock Product quality Convenient location Sales and promotions Variety of products Store cleanliness Rewards/loyalty program Helpful/friendly employees Speed of shopping trip Brands offered Sanitation/safety measures enforced Store organization Large selection of local products 82% 75% 74% 73% 73% 71% 68% 65% 52% 46% 44% 43% 42% 42% 41%
(40%)
(47%)
At the store
With consumers continuing to feel squeezed financially and with consumer confidence dipping, it’s no surprise that discount supermarkets have become more popular with Canada’s grocery shoppers over the past year. According to the latest edition of the study, 40% of survey respondents said they shop at a discount supermarket at least once a week, up from 37% last year. Dollar stores also experienced a significant uptick with 24% claiming to shop for groceries at these types of stores each week, up from 20% last year. Meanwhile, 63% of respondents said they shop at chain grocery stores and 19% at independent grocery stores at least once a week. Similar to last year’s findings, three-in-four shoppers (75%) head to the same grocery store for each shop; among those that do not, the majority (53%) are shopping across three different stores.
When determining where to shop, price continues to top the list of important factors for the bulk (82%) of shoppers surveyed. Other top considerations are product freshness (75%), and that the products needed are in stock (74%). Notably, helpful/friendly employees played a bigger role in store selection with 46% of shoppers indicating it as an important factor, up from 40% last year.
Grocers seemed to have upped their game when it comes to store appearance, achieving significantly higher scores on cleanliness and organization from shoppers, compared to last year. Less than half (42%), however, consider their primary grocery store “fun to shop.” And while 16% of shoppers say their grocery store
needs no improvement, most shoppers surveyed did think grocers could improve a few things, especially out-of-stocks, high prices, product selection and having enough checkout lanes open.
Sizing up loyalty programs
Loyalty programs have long been a tool used by retailers to keep shoppers coming back to the store, but what do shoppers think of them, really? Well, it seems they’re pretty popular. According to the study, 78% of shoppers said they were aware that their preferred grocery store had a loyalty program with 69% of these shoppers actively participating it. More good news is that the majority (63%) of participants are “extremely or very satisfied” with the loyalty program experience and 31% are somewhat satisfied.
While about half (49%) of active participants have used a grocery store’s loyalty program mobile app, a sizable segment (26%) have not. And with one in five (21%) shoppers indicating they are uncertain if the store even has a loyalty mobile app, a strategy to boost awareness should be considered. For those who said they would not enroll in a loyalty program the top reasons given
Grocery stores are performing better in terms of appearance with higher scores in cleanliness and organization compared to last year.
Store cleanliness *Store organization Variety of products Speed of shopping trip Employee friendliness Loyalty/rewards program Employee helpfulness Quality of prepared food Price of products Fun to shop
70% (63%) 24% (29%) 7% 66% (59%) 28% (32%) 7% 63% 30% 7% 60% (54%) 32% 8% 59% 29% 12% 59% 26% 15% 57% (51%) 27% (31%) 16% 56% 33% 11% 55% 33% 12% 42% 38% 20%
(9%)
Excellent/Very good Good Fair/Poor
Significant increase /decrease vs. previous year at 95% confidence level Values in brackets reflect previous year figures * Totals made end up being 99% or 101% due to rounding
DEFINING CONVENIENCE
When asked to define what “convenience” means in the grocery shopping context, location and ease of shopping are mentioned most frequently.
Easy access/nearby Easier/comfortable experience Fast shopping experience/time saver Good/constant product variety/selection Good price/value All-in-one Products in-stock Longer store hours 7% 7% 6% 6% 38% 23% 22% 15%
Of the 69% of shoppers enrolled and actively using a loyalty program, here’s how they feel about it:
6%
Not very/not at all satisfied
31%
Somewhat satisfied
63%
Extremely/ very satisfied
In their own words
Loyalty Program Holdouts
Reasons why shoppers say they would not enroll in a grocer’s loyalty program:
32% Requires too many purchases to earn rewards 25% Rewards/points/discounts aren't valuable to me 24% Belong to too many loyalty programs 18% Enrollment process takes too long 14% Asks for too much information 7% Belonged to similar programs and didn't like it 6% Cost associated with joining
IN-STORE AND ONLINE SHOPPING
were “requires too many purchases to earn rewards,” “rewards/points/discounts aren’t valuable to me,” and “belong to too many loyalty programs.”
The survey also revealed that store flyers continue to be popular with 84% of shoppers indicating they use either a print or digital flyer, with most looking at them before heading to the store. Interestingly, the study revealed a significant increase in shoppers using print flyers prior to their shopping trip (42% versus 35% last year).
In-store & online
Despite all of the buzz and investment around e-commerce, the physical store rules. When asked about their grocery shopping habits over the past month, 97% of those surveyed said they shopped in-store at some point and an average of 87% of grocery store trips were completed in-store, up slightly from last year. Among the online methods used to procure groceries (over the past month) were: curbside pickup (4%); contactless delivery (3%); in-person delivery (3%); and buy online for in-store pickup (2%).
Compared to last year, more shoppers reported being “completely or very satisfied” with their online grocery shopping experience (55% versus just 43% last year). But for shoppers who were not happy with their online experience, their top peeves remain the same as last year: 42% said the products they needed were out-of-stock, 33% reported the fees for the service were too steep, while 24% were unhappy with the product substitutions that were made. Also worth noting is that more shoppers (23%) said they received incorrect orders this year (up from 15% last year), possibly a result of supply chain and labour issues.
9%
Not very/ not at all satisfied
55%
Completely/ very satisfied
(43%)
36%
Somewhat satisfied
Significant increase /decrease vs. previous year at 95% confidence level Values in brackets reflect previous year figures
More online grocery shoppers were “completely or very satisfied” with the experience versus a year ago. For those who were not, out-of-stocks and fees named as top reasons.
Reasons why not completely satisfied with online shopping
Product(s) I needed were out-of-stock Fees are too expensive Unhappy with product substitutions Order was picked incorrectly Unhappy with quality of products Store does not offer delivery Process is too complicated Pickup/delivery window too far out Store does not offer curbside pickup 42% 33% 24% 23% 21% 14% 14% 13% 8%
(15%)
6% 1%
19%
When asked how they’ll shop in a post-pandemic world, most shoppers said they expect to shop for groceries in-store at a similar level as today, with 19% expecting to increase their time in stores. More than half of shoppers said they do not expect to rely on alternative order and pickup methods.
More About same Less Will not shop this way
6%
28% 6%
28% 6%
29% 6%
27%
74%
Shopping in-store Buy online for contactless delivery Buy online for in-store pickup
59% 7% 58% 8% 58% 7% 59%
Shopping today vs. Tomorrow
When asked how they imagine they’ll buy groceries post-pandemic, most (74%) shoppers said they expect to shop in-store at a similar level as they do currently with only one-in-five (19%) anticipating they’ll shop in-store more frequently. More than half of shoppers said they did not expect they would be using online ordering and pickup to get their groceries in a post-pandemic world.
We also asked shoppers to think about the size of their baskets today and when the pandemic is over; generally, these shoppers did not believe their basket size would change much once we’re out of the crisis with more than half (58%) saying they’ll spend the same on groceries in the future as they do currently. As far as meals go, shoppers said they don’t think their preference for homemade versus convenient meals would change much.
What’s on the list?
It may come as no surprise that we’re a nation of list makers, and before heading to the grocery store most of us (80%) have scribbled down the items we need to purchase. The good news for grocers is that a considerable number of us (67%) do not stick to that list and will be enticed to make additional purchases when shopping. And about 3% of us totally wing it and shop without a list, deciding what to purchase when in the store.
So, what’s in the cart? Fresh is clearly the focus with three-quarters of those shoppers surveyed indicating they had purchased produce, dairy (milk, eggs), bread/bakery and fresh meat/seafood in the past month. Some categories experienced notable declines compared to last year’s survey with fewer shoppers purchasing salty snacks (71% this year versus 76% in the prior year); pet food (31% versus 35%); and alcoholic beverages (28% versus 32%). But while alcohol may be waning, coffee is gaining with considerably more shoppers (55% versus 43% last year) adding it to their carts. Among the non-food categories, paper products are still in demand, but less so than they were a year ago with 63% versus 66% of shoppers purchasing them in the past month. Personal care and cleaning/sanitization products were also
SHOPPING BEHAVIOUR TODAY AND TOMORROW
Shoppers predict their basket size in the future (post-pandemic) will not change drastically from what it is today, with more of them selecting the midpoint on the scale.
STOCK-UP SHOPPER JUST GET A FEW NEEDED ITEMS SPEND MUCH MORE ON GROCERIES
Today-during pandemic (Oct. 2021)
13% 25%
STOCK-UP SHOPPER
34% 21% 7%
Today-during pandemic (Oct. 2021)
8% 16%
(6%)
JUST GET A FEW NEEDED ITEMS SPEND MUCH MORE ON GROCERIES
Predictedafter pandemic
11% 26% 39% 18% 6%
Predictedafter pandemic
6% 16% 53%
58%
SPEND MUCH LESS ON GROCERIES
18% 5%
(7%)
SPEND MUCH LESS ON GROCERIES
14% 6%
* Highlighted %s have a statistically significant difference at the 95% confidence level (Today vs. Predicted).
Significant increase /decrease vs. 2020 at 95% confidence level Values in brackets reflect previous year figures
purchased less by shoppers at grocery stores compared to a year ago.
Private label products were popular with shoppers with most (89%) indicating they purchase these products at least some of the time. When asked about their motivation for purchasing private label items, 70% said they did so to save money while 52% feel the quality is similar to that of national brands.
Shoppers reported spending, on average, $109 on their most recent grocery trip. Those with children in the household spent about $123 compared to $100 for households without. Cards continue to be the most popular form of payment with today’s shoppers with more than half of them (55%) paying by credit card and one in three (35%) using debit cards. No surprise, cash continues to dwindle in popularity and was used by just 7% of shoppers while mobile payments were used by 1% of shoppers.
And as for the expanded services offered by grocers, such as ATM/banking, florists, cooking classes, pick-up lockers or in-store dietitian services, most shoppers (67%) claim that they don’t use them. Among those shoppers who did report using such services, the in-store pharmacy was most frequently used, by 18% of respondents.
WHAT’S ON THE LIST?
Most (89%) grocery shoppers purchase private label brands at least some of the time with most doing so to save money and because they feel the quality is comparable to national brands.
Always/often 44%
Sometimes 45%
Rarely/never 9%
Don’t know/ not sure 2%
Reasons for purchasing private label products:
To save money/less expensive Feel quality is similar to name brand Store brand product is better than name brand Preferred name brand was out-of-stock Unique store brand product/there is not a name brand option Other 70% 52% 14% 12% 11% 2%
TOTAL SPEND ON MOST RECENT GROCERY TRIP
Shoppers spent $109, on average, on their most recent grocery trip. However, households with children, spent an average of $123 compared to $100 for households.
Mean = $109.58
$200.00+
12%
$150.00$199.99 12%
$100.00$149.99 $50.00$99.99
24% 30%
$25.00$49.99
17%
Less than $25.00
5%
% Selected $122.78
$99.56
Fewer 4%
More 14%
About the same 81%
Change in purchase frequency of private label in the past year
Payment type used on most recent grocery trip
Gift card 1%
Mobile payment 1%
Other 1%
Cash 7%
Debit card 35%
Credit card 55%
Prepared meals
Being the go-to destination for meals has been identified as big opportunity for grocers and a way to maintain some of the gains achieved during the pandemic when homebound consumers were eating the bulk of their meals at home.
According to the survey, 62% shoppers said they purchased prepared food at the grocery store in the past month, about the same as last year. For those shoppers who did not buy any prepared food, their reasons included “too expensive” (37%), and “prefer not to purchase at the grocery store” (36%) and “didn’t like the selection” (9%). Entrees—including rotisserie chicken, fried chicken, sushi etc.— were named as the most popular prepared items (purchased by 57% of shoppers). Interestingly, prepared cold side dishes were purchased by more shoppers this year (28% versus 22% in the prior year), while fewer hot sides were purchased (17% versus 22% last year). Generally, shoppers (65%) were “completely or very satisfied” with the prepared foods they purchased. And when deciding on whether to buy prepared food at grocery, shoppers said freshness, price/value, food quality and taste were their top considerations.
The survey did reveal that a sizeable number of shoppers (more than onethird in some categories) were not aware if their store offered meal kits, had plantbased prepared foods or offered curbside pickup of these foods, suggesting there’s an opportunity for grocers to boost awareness of these items and services.
PREPARED FOODS
Entrees are purchased most often at grocery and a majority of prepared foods shoppers (65%) are “completely or very satisfied” with their most recent purchase.
Types of prepared foods purchased at grocery in past month
Most important factors when purchasing prepared foods
Prepared foods-awareness and experience with services offered
Prepared entrees (e.g. rotisserie & fried chicken, sandwich/wrap, sushi, etc.) Baked goods (e.g. bread, rolls, pie, brownies, etc.) Prepared cold sides (e.g. pasta salad, potato salad, bean salad, etc.) Prepared appetizers/snacks (e.g. chicken wings, potstickers, egg rolls, etc.) Prepared hot sides (e.g. macaroni & cheese, mashed potatoes, French fries, etc.) Prepared entree salads Prepared soups
Freshness Price/value Food quality Taste Portion size Convenience/on-the-go Menu choices Sanitation 57% 40% 28% 20% 17% 17% 9%
(22%)
(22%)
Significant increase /decrease vs. (2020) at 95% confidence level Values in brackets reflect previous year figures
3%
Not very/ not at all satisfied
32%
Somewhat satisfied 65%
Satisfaction with most recent prepared foods purchase at grocery
Completely/ very satisfied
58% 58% 57% 51% 21% 18% 16% 14%
Significant increase /decrease vs. (2020) at 95% confidence level
(20%)
Values in brackets reflect previous year figures
Overview & Methodology
•Survey sample: 1,000 grocery shoppers •Respondents were required to be age 18+, reside in Canada, shop at grocery stores at least once a month and are the primary or shared decision-maker for household grocery shopping
*Made-to-order prepared food In-store restaurant Meal kits *Plant-based prepared foods Mobile/online ordering *Home delivery of prepared foods (6%) Curbside pickup of prepared foods
30% 24% 15% 12% 20% 18% 13% 24% 29% 16% 17% 26% 14% 15% 28% 12% 24% 10% 15% 40% 11% 18% 13% 21% 37% 10% 18% 15% 22% 36% 8% 23% 11% 21% 37%
(15%)
Yes, store offers and have tried Yes, store offers but have not tried No, store does not offer but would try No, store does not offer and would not try if did Don’t know
Significant increase /decrease vs. previous year at 95% confidence level Values in brackets reflect previous year figures
SUSTAINABILITY
Shoppers were asked how important it was that grocery stores demonstrate a commitment to the following sustainability-related practices:
*Donate food instead of throwing out Reusable bag incentives Locally-sourced produce/animal products Eliminate plastic bags/packaging Recycling containers for local use *Movement towards zero waste Ethical sourcing policies *Energy-efficient equipment/fixtures Electric vehicle charging stations
56% 28% 9% 6% 46% 38% 12% 4% 43% 41% 10% 7% 41% 36% 18% 6% 38% 41% 13% 8% 38% 43% 13% 7% 38% 39% 13% 10% 28% 41% 19% 11%
15% 24% 46% 15%(51%)
(39%) (16%) (6%)
Really important Somewhat important Not concerned Don’t know
Significant increase /decrease vs. previous year at 95% confidence level Values in brackets reflect previous year figures
* Totals made end up being 99% or 101% due to rounding
Likelihood to switch to a store demonstrating stronger commitment to sustainability:
Not very/ not at all likely 35%
Extremely very likely 15%
Somewhat likely 50%
2 in 3 (65%)
indicate some degree of likelihood they would switch their primary grocery store based on sustainability Younger shoppers are more likely to switch = Millennials (24%)
Gen-Xers (14%)
Baby boomers (11%)
Purchase of locally-made items at grocery
Always/often 38%
Sometimes 47%
Rarely/never 10%
A LOVE OF LOCAL
Most (85%) grocery shoppers purchase locally-produced products some of the time, with a majority doing so to support local businesses.
Reasons for purchasing locally-produced products
To support local businesses Feel quality is better Sustainable/better for environment More unique Other 68% 44% 40% 18% 4%
Fewer 5%
More 28%
Health, sustainability & local
Canadians continue to place a big focus on their health and wellness with 73% of shoppers surveyed claiming to be health conscious (up slightly from 71% last year). Breaking it down by generation, more gen-Xers (75%) and baby boomers (76%) declared themselves “health conscious” than millennials (just 66% of this group claimed to be). When it comes to meeting the needs of health-minded shoppers, there’s room for grocers to improve. According to the survey, just 35% of shoppers said they were “extremely/very satisfied” with the selection of healthy products offered at grocery stores.
When asked what health/better-for-you products they were most concerned about or interested in, 48% of shoppers said “fresh foods” while 34% said they were concerned about sugar and 29% sodium. Worth noting, just 7% of shoppers surveyed expressed an interest in vegan/ plant-based foods, but of this group 48% were extremely/very satisfied with the plant-based foods offered at their grocery store—this is up from just 27% last year.
And for the majority of shoppers it’s important that grocers demonstrate a commitment to doing right by the environment. In fact, 65% (up slightly from 64% last year) indicated they would consider switching stores based on the retailer’s record on sustainability. Among the most important sustainability practices for shoppers: donating rather than tossing out food, reusable bag incentives, elimination of plastic bags/packaging and locally-sourced products.
Canadian shoppers also profess a great fondness for locally-made goods with most (85%) saying they purchase locally-produced products at least some of the time. And 28% of shoppers reported purchasing more local products in the past year. While sustainability is the main driver for 40% of shoppers buying local, 68% of shoppers say they do so to support local businesses while 44% feel local products are of better quality. CG
Don’t know/ not sure 5%
Change in purchase frequency of locally-produced products in past year
By Rebecca Harris
From tackling waste across the value chain to broadening their social impact, grocers are reinventing what it means to be green
THE BIG SUSTAINABILITY SHIFT
IN THE MID-2000s, the media declared that green was the new black, as environmental awareness surged and people sought to cool their impact on global warming (with much thanks to the Al Gore documentary An Inconvenient Truth). Magazine brands pumped out “green issues” (some on glossy, unrecyclable paper, nonetheless) and environmental claims like “all-natural” and “eco-conscious” took over the shelves and advertising airwaves.
And then, for reasons like greenwashing and the realization that people can’t consume their way out of the problem, green faded to black. But, what’s happening now in food retail is arguably bigger, better and greener.
“The industry is embracing sustainability strategically and we’re seeing it guide decision-making in virtually all areas of food and beverage businesses,” explains Shelley Balanko, senior vice-president of The Hartman Group. “Previously, whether it be retailers or food and beverage manufacturers, sustainability was siloed and compartmentalized. Now, it’s taking the same evolutionary path we saw with health and wellness 20 years ago. Wellness has to be part and parcel of everything you do in the organization...and that’s what is happening with sustainability.”
Retail consultant Carol Spieckerman calls it “sustainability’s second act.” “In the past, there was a lot of box checking and retailers would talk about sustainability primarily as a PR play,” says the president of Spieckerman Retail. “Now, they’re making longer-term, more specific commitments across more areas, from carbon emissions and food waste, to supporting local food banks, to community involvement.”
The reasons behind the sustainability push haven’t changed much since the green movement of 15 years ago: concern about climate change and consumer demands that companies do less harm to the planet. However, a few things are different now. “Retailers are now armed with better consumer data and more granular data,” says Spieckerman. “It’s to the point where
it’s undeniable that new generations of shoppers truly care about sustainability—and on a number of fronts.”
In addition, whereas eco-advocates from back in the day sounded a warning bell on climate change, today’s environmental challenges seem more like a fivealarm fire. To wit: The 2021 report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC) projects climate change will increase in all regions in the coming decades. For 1.5° C of global warming, IPCC warns there will be increasing heat waves, longer warm seasons and shorter cold seasons. At 2°C of global warming, heat extremes would more often reach critical tolerance thresholds for agriculture and health, the report states.
On the big picture of climate change, Joe Solly, a partner with Deloitte’s risk advisory practice, doesn’t pull any punches. “We now have this notion of an existential threat, where there is a lot of fear the planet is going to heat up so much that we’re going to have a catastrophic failure of our ecosystems and our societal reliance on those and, therefore, of our continued survival,” says Solly, who is also the Ontario leader of Deloitte’s sustainability and climate change practice. “So, it’s a horrible story and a horrible picture all around, no matter how you look at it.”
If this seems grim, Solly also points out there’s a real business case for sustainability practices. More companies, for example, have begun to set net-zero targets, meaning the greenhouse gasses they put into the atmosphere are balanced by removing an equivalent amount. (The Paris Agreement mandates net-zero carbon emissions globally by 2050). “When you anticipate the future cost of carbon, the lower cost of lower-emitting technologies, government grants and incentives, and access to sustainability-linked loans, there is a positive business case to pursue net zero and reduce your emissions, in addition to meeting customer requirements,” says Solly.
While the pandemic put some green efforts on pause, the industry is getting serious about sustainability for the long term. Here a few key areas grocers and their suppliers are focused on: Reducing carbon emissions: As the fight against climate change becomes more urgent, many industries are stepping up efforts to reduce greenhouse gasses. For grocery retailers, this could take shape in a number of ways. Deloitte’s Solly suggests: having energy efficiency programs and practices in stores and distribution centres; exploring on-site renewable energy generation such as solar rooftops; and reducing emissions from fleets with things like better route planning, fuel-efficient driver practices, and switching to electric vehicles.
As part of its sustainability strategy, Calgary Co-op has a strong focus on greater energy efficiencies and reducing greenhouse gas emissions. The retailer’s new Sage Hill location, for example, has LED lighting that uses 80% less energy and lasts 50% longer than traditional lighting. Calgary Co-op also upgraded its refrigeration systems to make them more energy efficient, and plans to do the same in its other stores.
CEO Ken Keelor says another highlight is the use of combined heating and power (CHP) systems at six Calgary Co-op locations. This energy-efficient technology converts natural gas into electricity. At the same time, it uses waste heat produced by natural gas to boil water that is used to heat or cool the building. In addition to significantly reduced energy waste and greenhouse gas emissions, there’s a real cost benefit. “We’ve cut our utility costs at these locations by 30% to 40%,” says Keelor. “That’s huge, as energy bills have been rising.”
Greening the supply chain: While retailers work to get their own houses in order, they also must consider the impacts of their supply chain. On the carbon emissions front, for example, research from non-profit CDP found that 90% of all disclosed emissions in the food sector come from supply chains (what’s referred to as “scope three” emissions), rather than stores and distribution centres.
Elliot Morris, partner at EY, says retailers can make an impact with their wide network of suppliers in key areas such as plastics, packaging and food waste. Not only is there an obvious environmental benefit, but research also shows consumers are willing to spend more on sustainable brands. “[Retailers] need to collaborate more across their supply chain to be able to provide transparency to the end customer,” says Morris. “When the customer has the right information, they will feel empowered to make choices for themselves.”
Walmart is one major retailer that’s putting a big push on suppliers to be more environmentally friendly. Project Gigaton, which Walmart launched in 2017, aims to remove one billion metric tons (a gigaton) of greenhouse gasses from Walmart’s supply chain by 2030, through everything from energy and waste to packaging and product design. Last year, Walmart expanded the project to include suppliers’ fleets.
Responsible sourcing is another key part of building a more sustainable supply chain. Deloitte’s recent report, “The future of food: A Canadian perspective— the sustainability conviction,” notes that consumers are paying more attention to where their food is coming from—they’re asking if it is ethically produced and are striving to buy more local foods. “These trends are also pushing food companies to ensure their suppliers respect human rights standards and avoid involvement in unsafe working conditions, unfair wage practices, human trafficking or slavery,” the report states.
Longo’s places a big emphasis on responsible sourcing as part of its wide-ranging sustainability efforts. Last year, Longo’s became the first North American retailer to only offer Fairtrade bananas, through a partnership with banana importer Equifruit. The company has also committed to using sustainable palm oil in its packaged private label products by 2025, and is committed to sustainably sourcing 100% of its fresh and frozen seafood by 2025.
“When our guests are shopping in our stores, they’re not only looking for high-quality, curated products, but also they’re trusting us that we’re sourcing those in a manner that reduces environmental impact along the way and protects things like human rights,” says Longo’s sustainability specialist, Danielle Reid.
THE RISE OF THE ECO-CONSUMER
As environmental and social concerns are top of mind, consumer support for sustainable brands is growing. The EY Future Consumer Index found that 80% of Canadians believe sustainability is an important criterion when making purchases. One third of Canadians say they’re going to buy more sustainable products this year compared to 2021, and 23% say sustainability will be the most important purchase criteria in three years.
While what consumers say they’ll do isn’t necessarily what they do, sustainability might have an edge here. “First and foremost, Canadian consumers support retailers [and brands] prioritizing sustainability,” says Elliot Morris, partner at EY. In addition, the one third of consumers who intend to buy more sustainable products is not small potatoes. “That’s a very attractive market segment in and of itself—it’s disproportionately young and well off,” says Morris. “And so, in addition to broad support, there are valuable customer segments that retailers and CPGs want to pursue, and rightly so.”
While price and value are still important to grocery shoppers, Morris doesn’t think those criteria are in conflict with sustainability. “Sustainability doesn’t necessarily need to cost more,” he says. “In fact, sustainability creates efficiency, which creates cost savings, and those cost savings can accrue to the retailer, the CPG, or the customer.”
Reducing waste: Retailers are also digging into the challenge of reducing waste on all fronts: food, plastics and packaging. “When it comes to packaging and single-use plastics, while retailers had a pass at the beginning of the pandemic, they don’t any longer,” says The Hartman Group’s Balanko.
Calgary Co-op, which eliminated plastic shopping bags at the start of 2020, has ramped up its composting and recycling efforts, including electronics, cardboard, plastic and paper. “Overall, our waste generated is down 10% from 2019,” says Keelor. “For example, in 2020, our cardboard, paper, plastics and organics recycling and composting diverted 91% of our total waste.”
Longo’s has set a target of 90% of its waste diverted by 2025 and is investing in developing various diversion streams for materials like cardboard and plastics. “We’ve also been working with our vendor partners on what’s coming into the stores in the first place to ideally try to reduce that waste,” says Reid. “If we’re not able to, we want to ensure that the packaging is compatible with one of our streams.”
With food waste, retail consultant Spieckerman points out another thing that’s different about today’s sustainability movement: there’s a proliferation of third-party providers that can help. “That wasn’t the case before: it was pretty much all on retailers to make it happen,” she says.
Apps like Flashfood, Too Good To Go, and Sauvegarde, for example, offer customers discounts on food nearing its “best by” date, and if not sold might end up in a landfill. Spieckerman says these digital marketplaces provide “plug-andplay” sustainability options for grocers. “On one hand, it makes it easier for retailers because they have a growing roster of partners that can help them achieve their sustainability goals,” she says. “On the other hand, it’s a challenge because there are no excuses not to do it.”
For Deloitte’s Solly, reducing food waste takes a whole value chain approach, including: working with farmers to reduce waste; supporting regenerative agricultural practices; selling expiring products; donating to food banks; and upcycling, which is the process of making food and beverage products with certain ingredients that would otherwise go to waste.
Solly has some advice on a couple of fronts. “Retailers need to get better at displaying [nearly expired foods] in stores because when you walk into a grocery store, it’s really difficult to find those items,” he says. “So they need better practices in stores and they need to leverage [food waste] apps to create customer awareness and push those products.”
Creating social impact: While climate change, pollution and extreme weather events tend to garner the headlines, sustainability increasingly includes social impact and people’s well being. For Calgary Co-op, this includes food-drive programs, offering the community physical spaces to gather, partnering with local social agencies, and giving through the Calgary Co-op Foundation.
Calgary Co-op recently conducted a pilot with long-time partner Calgary Food Bank at six stores. Perishables that would otherwise go to compost were donated to the food bank, which collects food five days a week. Keelor said the project is being expanded to all Calgary Co-op stores, and the donations now include dairy, deli, meat, produce, bakery, frozen and grocery.
“Our compostable product will go down because we are able to divert it for actual [human] consumption,” says Keelor. “Calgary has a lot of people who are homeless or living in shelters and need that support. So, this to me is the biggest initiative we’re doing that helps both the social and environmental pieces.”
Looking ahead, Balanko says consumers will one day see the social and environmental elements as less distinct and more interrelated. One example is people seeing environmental sustainability as being tied to their personal health: if fish are consuming micro-plastics in the ocean and people consume the fish, it affects their personal health. “That’s how the most trend-forward consumer thinks right now,” says Balanko. “We anticipate the mainstream consumer will start thinking that way and seeing the environment and personal health as one in the same in the not too distant future.” CG
Generation Next Thinking is an ongoing series that explores the cutting-edge topics that are impacting grocery retail today and in the future.
KRUGER PRODUCTS TEAM MEMBERS BUILDING ON A DECADE OF POSITIVE CHANGE FOR A STRONGER TOMORROW
KRUGER PRODUCTS CEO, DINO BIANCO, CELEBRATES A DECADE OF POSITIVE GROWTH
A new year brings renewed vigour in pursuing our mission of “Making Everyday Life More Comfortable” by leading with kindness, overcoming challenges, and setting bigger, bolder goals. We’ve set the bar high to support the needs of Canadians, our customers and our people to bring out their greatness. For a 10th consecutive year, Kruger Products celebrates our place on the list ofGreater Toronto’s Top Employers, which recognizes employers who have gone above and beyond to offer forward-thinking policies and exceptional workplaces for their employees.
I am inspired by the resilience of our people and their connection to our purpose during even the toughest of times. Our priority is ensuring our employees are supported in all aspects of their lives and helping them realize their full potential. We know that our differences make us stronger and together we make Kruger Products a great place to work.
As the leading manufacturer of Canada’s most trusted and best loved tissue brands, including Cashmere® and Purex® bathroom tissue, Scotties® facial tissue and SpongeTowels® paper towels, we have worked together to transform our company to elevate our communities and protect our environment while leading the tissue industry to new heights. Through relentless innovation we have achieved so much as a team, including building on our longstanding national sponsorship partnerships with Crohn’s and Colitis Canada (since 2014) and the Kruger Big Assist (launched in 2020), renewing our sustainability commitment for another 10 years through Reimagine 2030 and successfully commissioning our state-of-the-art Sherbrooke, QC manufacturing facility.
For 10 years, Kruger Products has been a GTA Top Employer and a company that empowers our people to lead and create positive change for a stronger tomorrow. These achievements were possible because of the efforts of our 2,700 team members across the entire company. I appreciate the opportunity to share our story and reflect on some of our proudest moments.
Thank you,
Dino Bianco, CEO
Expect to do something great at Kruger Products. krugerproducts.ca/careers
EXCLUSIVE SPONSOR
Ran Goel, Fresh City Farms
FRESH CITY FARMS Paving the way for a fresh, sustainable future
By Rosalind Stefanac Photography by Tobi Asmoucha
BEFORE RAN GOEL started Fresh City Farms in Toronto 11 years ago, he was practising law in New York City, working with hedge fund investments in the aftermath of a major financial crisis. “I realized how fragile the systems we rely on can be, including our food supply,” he says. With an over-reliance on processed foods and imports, Goel decided he wanted to be part of creating a more sustainable solution, starting in his hometown of Toronto. “I became infatuated with this idea of urban farming and leveraging that to get people really thinking about where their food comes from—and enjoying their food more in the process.”
True to his word, Goel moved back to Toronto and started Fresh City as an urban farm at Downsview Park, growing organic produce and delivering it to city dwellers via an online subscription service. “Eventually, we were no longer able to grow everything we sold so we partnered with local farmers to sell local, organic produce and eventually basic groceries too,” says the CEO and founder.
Today, not only does Fresh City employ 300 people and feed 40,000 people a month across southern Ontario through its online delivery service, it supports more than 20 farmers in growing their own vegetables, herbs and flowers to sell. Over the last few years, the company also opened two brick-and-mortar Fresh City stores, and another six under The Healthy Butcher and Mabel’s Bakery & Specialty Foods banners.
Goel says the company made the strategic decision to open physical retail stores and produce more of its own products to sell in-store and online to put a greater focus on vertical integration. “We know we’ll never be able to compete with Costco or Walmart in selling canned tomato sauce, organic or not, so we really wanted to create products that were unique and reflected our sourcing values,” he says. In going down this path, the opportunity to acquire Mabel’s and The Healthy Butcher—which focus heavily on locally made/organically sourced products—seemed like the logical step. These days, about 35% to 40% of Fresh City sales come from products made in-house, ranging from soups, salads, and sandwiches to smoothies, baguettes, entrees and appetizers.
“There are also the dozens and dozens of relationships we have with local farmers and local makers of various kinds,” say Goel, noting that Fresh City has been carrying products from retailers like the Village Juicery since the cold-pressed juice company first launched.
During the pandemic, Fresh City also made the decision to leverage the liquor licence in place at its downtown store to start a liquor delivery service. “Of course, it aligns to our sourcing values with a focus on B.C. and Ontario organic and natural lines,” says Goel.
Sustainable farming long-term
In promoting a more sustainable, longterm approach to fresh food production, the company recently secured a 20-year lease to an 11-acre plot of land at Downsview Park. Fresh City Farms will use 1.5 acres and the rest will be subdivided into smaller plots for other “complementary” organizations and individuals interested in farming. For example, the YMCA will be farming one plot as part of a summer camp for youth, while another farming collective will be geared to single, racialized mothers. Goel says proposals from other prospective farming innovators are always welcome.
The location offers water access, a harvest processing area, dry and cold storage, greenhouse space and washrooms. “We’ve always divided our farm [land] with other farmers which has created a sense a community,” says Goel, noting that many have gone on to do other “cool things” like starting their own rural farms,
or developing rooftop and warehouse farms. “A big part of what we’re trying to do is incubate a new generation of not just farmers but food entrepreneurs,” he says.
Once pandemic restrictions are lifted, the plan is to also use the property as a space for weddings, corporate retreats and culinary events.
Yet even with all of Fresh City’s success to date, Goel admits that the grocery industry isn’t easy for specialty businesses like his, especially with a global pandemic added to the mix. He recalls there were more than a dozen organic box delivery services in the area when Fresh City started out; now there are just two. “I don’t like to sugar-coat it because it’s tough; it’s really a day-by-day, quarter-by-quarter kind of decision making,” he says. “We’re always pushing the envelope on social and environmental causes, so it’s never this point of feeling truly comfortable.”
Tackling bigger competitors and the pandemic
What Goel sees as Fresh City’s advantage in the market is a growing expertise in being able to educate customers and offer engaging storytelling around why its products are unique and warrant a higher price point. For example, preCOVID, the grocer organized an event where customers could tour the farm and meet famers and key vendors. Similarly, communications sent out to customers often include photos and videos about Fresh City initiatives rather than being just product focused.
“The big grocers and the legacy infrastructure they have to defend just can’t do what we do,” he says, whether that be supporting small farms or focusing on circular-packaging initiatives that engage customers. “We were also among the first in Canada to offer fair-trade organic bananas.”
COVID-19 has also prompted the grocer to put a greater focus on cost efficiencies both online and in-store. With an e-commerce platform created in-house, Fresh City was able to be nimble in making adjustments to stock and delivery times as needed. “In some areas of the Greater Toronto Area we only deliver once a week, creating a denser delivery route, which is better economically and better for the environment,” says Goel.
Being able to offer already curated food baskets based on what’s available also proved cost-effective. “These baskets were much easier to pick and pack so we could serve more people during that dire first part of the pandemic,” says Goel.
Even though things are starting to settle down on the labour front, an ongoing concern in the retail sector, Goel says pandemic-related staffing concerns have reinforced the fact he wants his business to be an employer of choice. “For us, our retail brick-and-mortar company is fairly young, but I think we have some work to do—like many of our competitors— in improving the work experience for frontline workers,” he says. “But I think we’re up for the challenge.” Another key learning to come from the COVID crisis is the merit in simplifying operations. “We’ve seen simplified menus and less SKUs at grocery stores during the pandemic and I think that’s here to stay,” says Goel. “If the market is signalling that labour is going to be more expensive, the things that cheap labour made possible may no longer be possible and that’s fine.”
Going forward, Goel says the company will continue improving and expanding its e-commerce platform and look to double (or even triple) its store count and online customer base within the next five years. Its primary goal, however, is the same as it was when Fresh City first began: to be at the forefront of pushing customers to shop more locally, organically and sustainably. CG
(Below) Ran Goel and Fresh City Ossington manager Bryan Sherry. In recent years the company has grown to include eight specialty stores
healthy spreads
Tasty and nutritious, healthy spreads are gaining popularity as a go-to choice throughout the day
Whether they’re nut, fruit, chocolate or butterbased, spreads have long been a kitchen staple. After all, they’re convenient and make a common slice of bread so much tastier. But as consumers become more and more focused on healthy living, they’re gravitating to healthier spreads with less sugar and a more natural ingredient list. The latest research from Future Market Insights shows the global spreads market rising by a compound annual growth rate of 6.3% between 2021 and 2031, largely driven by this focus on healthy eating. Here are several reasons why healthy spreads should be on every grocer’s radar these days. Nutrition first: With more and more all-natural nut and seed butters available, it’s not surprising that consumers are ditching processed butter and sugarfilled spreads for these healthier options, which are high in protein and good fats. Similarly, those who steered away from sugar jams are discovering naturally sweetened, gluten-free and organic options made with high-quality fruits and no artificial flavourings. “Everyone thinks that jam is full of sugar and our mission at Healthy Crunch is to really innovate everyday foods and make them healthier,” says company Founder and CEO Julie Bednarski. “What’s unique about our chia jam is that there’s only two grams of sugar per serving and we also add chia seeds for extra fibre.” (Typical jams contain 10-12 grams of sugar per serving and no fibre.) Unique flavour boosts: Traditional jams (i.e., strawberry, blueberry, raspberry) are giving way to a bevy of interesting pairings, such as fruit with chia. More exotic fruit flavours such as mango, pineapple and fig are being blended with herbs and spices, such as mint and ginger. Another market trend is the shift from sweet-tasting spreads to combinations of sweet and spicy, or sweet and smoky. Meanwhile, peanut butter alternatives continue to gain momentum. Not only are consumers going beyond almond and cashew to pistachio and walnut butters, many parents are opting for allergen-free seed butters made from sunflower, chia, flax and even watermelon seeds. Beyond breakfast fare: Spreads have always had their place in a standard breakfast. But with healthier ingredients and more robust flavour profiles available now, consumers are choosing to use spreads in sauces, smoothies, baking and even straight out of the jar for a mid-day, nutrition hit. As flexitarian and plantbased diets become more popular, healthy spreads can fit nicely into various meal plans.
Spreads that score high in flavour + nutrition
Seed butters: Made with allergen-free sunflower seeds, school-approved Seed Butters from Healthy Crunch come in kid-favourite flavours like chocolate, chocolate banana and salted caramel. Chia jam: The first in the world to be Keto-certified, Healthy Crunch’s Chia Jams are naturally sweetened and packed with chia seeds for added protein and fibre.
