How Sobeys is plotting to lead Canadian grocery ecommerce

Reaching 75% of Canadian households

This site will be the final one to open in Canada as part of this partnership. Last year, the first CFC launched in Toronto, with the second site expected to go live in Montreal in the near future. A third site is planned for Alberta. With the four sites operational, Sobeys estimates that it will be able to reach 75% of Canadian households and approximately 90% of grocery ecommerce spend through its Voilà delivery service.

Ocado’s technology innovations

The CFC will benefit from new technology recently announced by Ocado. This offers greater efficiencies and a lighter environmental and carbon footprint. The company’s on-going innovation programme was cited as one of the key reasons why Sobeys partnered with the business. Sobeys believes that centralised fulfilment is the most profitable channel solution at scale, a fact which it believes will enable it to become the leading operator in the channel.

Unique approach in Canada

Sobeys is the only retailer in Canada to adopt this model, with all of its competitors mainly operating a store-pick model. Sobeys also operates this model, launching a grocery pickup service nationally last year, optimising Ocado’s technology. This has been introduced into two different types of locations. First, in areas where it will not offer a home delivery service through its centralised Customer Fulfilment Centre (CFC) model, and second, in areas where it wants to offer ecommerce ahead of the CFC and home delivery roll-out.

$10.3bn channel opportunity

The grocery ecommerce channel is expected to reach CAD$10.3 bn by 2026 , accounting for 6% of the market. It will be the fastest growing channel, with a CAGR of 11.6% between 2021 and 2026. The market is currently led by Loblaw. It mainly uses a store pick model, although it has been testing automated and manual micro-fulfillment centres within a small number of its stores. Walmart has adopted a similar approach. Recently, Metro launched a dark store in Montreal to ease the pressure on its stores in the city. It expects to develop a similar model for the Greater Toronto Area.

Fulfilment model drives range

The channel continues to evolve with several quick commerce companies emerging. These include Tiggy, which has launched in Vancouver and Toronto, and Ninja, which is operating in Toronto. Meal delivery companies, DoorDash and SkipTheDishes, have also moved into grocery delivery. Instacart and Cornershop are also working with several of the major grocers for delivery in as little as two hours. For suppliers, understanding the operating and fulfilment model is critical as this has major implications in terms of the range of products which can be offered and the different missions retailers are aiming to serve.