Delivering the goods — and profits

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This article was published 28/03/2017 (2579 days ago), so information in it may no longer be current.

Save-On-Foods, the latest entry in the city’s ultra-competitive grocery market, appears to be giving Winnipeg shoppers at least two things lacking at most other major chain stores — in-store customer service and online home delivery.

In fact, store officials were surprised by the city’s response to their home delivery service.

“We were shocked,” Save-On-Foods president Darrell Jones said. “It’s been a great response from the folks in Winnipeg.”

For competitive reasons, Jones wouldn’t reveal exactly how many home delivery orders the company’s three Winnipeg stores are getting each week.

But he did say the Vancouver-based chain’s local operations reached the 1,000-orders-per-week threshold faster than in any other market the company has entered.

One food industry expert said being the first major grocery chain to offer home delivery in Winnipeg was a deft move by Save-On-Foods.

“The first-move advantage is key in the online grocery business,” said Sylvain Charlebois, professor in food distribution and policy at Halifax’s Dalhousie University.

Charlebois said the online grocery business in Canada is expanding by 15 to 20 per cent per year and that will continue. “It’s going to become big business over the next… 10 to 20 years. In urban markets, I actually do see tremendous growth.”

He said that’s why Walmart and Real Canadian Superstore now offer a “click-and-collect” service for online shoppers at some of their stores here and elsewhere in Canada.

With the option, shoppers can order online, and a store employee fills their order and brings it out to their vehicle when they arrive to pick it up.

Charlebois said one of the advantages of offering home delivery is it enables a retailer to attract customers who, for whatever reason, may not have otherwise shopped at one of its stores.

“With click-and-deliver, you can be on the outskirts of Winnipeg and very far from whatever store you’re buying from and still give your business to that store,” he noted.

“So the thing about delivery, and I think that’s what some companies are realizing… is that you can expand your footprint (in a market) when you decide to commit to delivery. In a nutshell, the click-and-collect strategy is more about defence, while delivering to the home is more about offence. It’s more about being pro-active.”

Charlebois said he’d be surprised if the other major chains start offering home delivery.

He said many of them have higher overheads and aren’t currently set up to offer that kind of service.

“I fail to see the fit, but you never know. I do think that down the road, expectations will shift,” Charlebois said.

He said millennials and young families with children are the main drivers of the growth in online shopping and home-delivery usage in Canada.

Jones agreed, but added it’s not limited to just them.

“It’s millennials that use it, it’s older people, it’s baby boomers, it’s anyone that has the need.”

Save-On-Foods charges between $4.95 and $12.95 for a delivery, depending on the time of day. It can be same-day delivery if the orders are received before 8 a.m.

Otherwise, it’s next-day delivery. Online shoppers can also pick up their order at one of the company’s three stores.

While Walmart and Real Canadian Superstore charge a fee for their click-and-collect service, Save-On-Foods does not, Jones added.

While Save-On-Foods is the first major grocery retailer to offer home delivery in Winnipeg, a number of smaller, independent operators have been offering it for years.

Among them are Cantor’s Quality Meats and Groceries on Logan Avenue and the Downtown Family Foods store on Broadway.

Cantor’s owner Ed Cantor and Downtown Family Foods owner Craig Fredette said they’ve seen a dip in their home-delivery orders since the three Save-On-Foods opened last November.

“We’ve noticed a little change in it, but we’ve been trying to fight back as best we can,” Cantor said.

He noted their family-owned store has been offering home delivery for about 60 years. Customers can order online or over the phone, and the delivery charge is $13 for anywhere in Winnipeg and communities just outside the city.

“If people want the service, that’s how you look after the customer. You try to do everything you can.”

Fredette said his store’s online business is holding up pretty well so far.

“You lose a few customers because we don’t have as much (product) selection as Save-On-Foods does. Especially when it comes to their ethnic (foods) stuff,” he said.

But he noted it’s the weather that has the biggest impact on his online-shopping volumes.

“As the weather gets nicer, the online business goes down,” he said.

murray.mcneill@freepress.mb.ca