What does the growing number of discount grocery stores mean for convenience stores?
Major grocers began a pivot into discount about three years ago as consumers favoured sales and other deals amid high food inflation.
And it's been paying off. Grocers have been crediting their discount locations for fuelling sales growth; meanwhile, consumers appear set in their deal-seeking behaviour — which will bode well for continued momentum in the discount grocery space.
For major grocers, the focus is on bringing shoppers into their stores, said Henry Chambers, senior vice-president of Canada and the Americas at Sentinel.
"How do I help the shoppers stay within my estate, whether that might be a No Frills, whether it might be a Save on Foods, without going to the competition?" he said.
"Because effectively, I sell the same stuff that my competitors do."
Chambers said grocers didn't have a choice but to pivot, given consumer demand for lower prices and an intensifying race for the consumer dollar.
It was also a way to guard against potential new entrants into the market, he added.
"Any Canadian retailer's biggest threat is competition. What if Aldi comes to our market?" Chambers said.
Aldi, a German discount grocer, expanded its existing store footprint in the U.S. market last year and plans to open more storefronts, as value-seeking consumers flock to shop there. Former Industry Minister François-Philippe Champagne had touted the possibility of a foreign entrant shaking up the Canadian grocery landscape at the height of food inflation in recent years.
But for conventional banners to have an edge, Singh said they need to narrow down their focus.
"When we look at the data, it seems that conventional grocers with a purpose or differentiation are doing better than your regular supermarkets," he said.
He gave the example of T&T Supermarket, a Loblaw-owned store which has a defined focus on Asian food.
"They get superior produce, they get some exotic food products that you can't buy anywhere," he said.
Loblaw has said it's looking to open three new T&T Supermarkets in Canada and three in the U.S. this year. Overall, the grocer has at least 70 new stores — a host of discount stores and pharmacies — in the works for 2026.
Singh said the same idea goes for Empire's Farm Boy and Longo's, which cater to consumers looking for premium brands and products.
Chambers said if grocers want to lure consumers back to their conventional stores, they'll have to lower their costs. And there are only two ways for them to tackle that.
One way is by cutting expenses, such as reducing staff, store wastage or operating hours, he said.
In the U.K., for example, he said some grocers have had to become "vanilla" and stripped out convenience services, such as florists or fresh sushi.
The other way is by putting pressure on suppliers and asking for lower prices so the grocers can sell more volume.
"The harsh reality is we're going to have to make some cuts within stores to invest into retail price," he said of grocers.
"Consumers aren't going to suddenly come back in our store and pay another dollar, another 50 cents for that particular product."
