In my experience there are only 2 things that change grocery retailer behaviour. Tighter rules & stiffer competition.
Having been on ‘both sides of the desk’ in the competitive UK grocery industry, it’s the most guaranteed crystal ball you will ever lay hands on.
A Grocery Code helps change retailer & vendor relationships for sure. More ethical, longer term planning, collaboration & re-allocation of investment. This starts this week in Canada & will evolve over the years to come, with its success being dependent on vendors understanding & capability.
Phase 2 however can be an instant overnight impact & that is of course when the discounters arrive. For those who remember their launch strategy in the UK in the early 90s, with the ‘3p a tin Baked Bean war’ was a perfect strategy with exemplary execution to create instant consumer awareness & rattle the big guns of UK retail, which overnight caused established retailers to offer their own value ranges.. ( not great news for retailer category managers managing their margin mix at the time I can tell you !)
Welcome to my friends at Aldi, who for those who have been asleep in the last few years are the world’s 5th largest global retailer (not forgetting the 3rd largest retailer ‘Schwarz group’ with discounters such as Lidl & Kaufland). Aldi are active in over 20 countries, the fastest growing retailer in the US with 2,400 stores, 3rd most visited US store …and so the accolades go on…& it’s a similar story in Australia, with Aldi now 11% market share & crowned 3rd largest grocery retailer.
Having myself been a supplier & vendor to Aldi across several categories, they are a great retailer to work with as long as you abide by their play book. Their focus on sustainability, quality, value for money & even self-scan check outs is legendary….& all at the same time that the 60 year old divorce (due to family disagreement about the sale of tobacco) Aldi North & South relationship is being rekindled as they plan their future world domination, and no doubt analysing how Target went wrong in Canada 10 yrs ago.
There is a watch out of phase 2 & certainly experienced in the UK over the last few years, that established grocery retailers become ‘vanilla’ by stripping out business operating costs ( that’s things that look nice in store/retail-tainment : Bakery, Butcher, Fish & Cake counter) & whilst trying to fight the new play book of the low cost operating model.
It’s not all doom & gloom, as savvy retailers will find an edge & offer a true point of difference , but will have to work hard. Aldi & Lidl are also rather good at this mechanic with their mid week & Sunday special buys.
Let’s not be mistaken either that low price means low quality, if so you have clearly never been into an Aldi or tasted their award winning champagne – recently awarded ‘Best Champagne in the World’ by the World Champagne awards in Summer 2025.
Times are changing
Now the change of tide is already underway in Canada, with changes in legislation from the competition bureau to prevent land grabbing & restrictively leasing agreements by the major retailers.
Loblaws have worked hard especially in the last 2 years under the leadership of Per Bank, to keep the Aldi’s of this world at arms length & focus on their value franchised operation of No Frills, to provide an image of how a discounter could look – hum? & borrow some time.
So why now ?
Food inflation continues to rise quicker than salary & wages, which is a problem for us all. McKinsey latest report predicts ‘low volume growth in food through till 2030 & continuation of rapid private label growth in the economic climate’ .
What can Discounters provide? Reduce unemployment by creating new jobs, Help reduce prices of food by operating a different P&L structure & often support/provide local housing projects. Not a bad deal I’d say if I were in Government & needed voters.
So all very interesting but what are the urgent actions for Canadian Vendors…
- Be Code ready – use it to your advantage to reset your growth investment. It makes a massive difference.
- Branded vendors must work hard on your brand or you will be outperformed & left behind. Ideal growth opportunity for Private label.
- Get ready for change & I don’t mean AI…
