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One square foot at a time for supermarkets

Looking for industry growth? Don't look to traditional stores. Look at Walmart, Costco and Asian stores, like the one I just visited

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Last year wasn’t exactly a winner for traditional grocers. Nationally, sales crept forward just 1.1 per cent.

Mind you, Canadians didn’t stop buying groceries; they just bought at places other than traditional grocery and convenience stores–specifically, mass merchandisers (read: Walmart), warehouse clubs (read: Costco) and ethnic or Asian supermarkets. All three non-traditional grocery formats experienced double-digit growth.

READ: State of the Canadian grocery industry in 2012

Costco’s food sales grew around 10 per cent last year, says Perry Caicco, managing director of equity research at CIBC World Markets in Toronto.

Walmart’s food sales rose about 20 per cent, with a third of its gain coming from former Zellers stores it picked up. Asian supermarkets, meanwhile, are on a tear. Collectively, they’re growing 15 to 20 per cent annually, Caicco says.

Asian supermarket sales are rising quickly in part because of the large number of those stores being opened, especially in parts of southern Ontario. In the last few months alone, a Nations Fresh Foods was built in Woodbridge, north of Toronto and, more recently, an Al Premium Food Mart opened in the cultural melting pot of Scarborough, in Toronto’s east end.

Canadian Grocer has already written about Nations and its parent company, Oceans, so I decided to visit Al Premium, which is not far from where I live.

Al Premium had a rather rocky start after opening in December. A flyer sent to thousands in the neighbourhood ahead of the opening contained an incorrect phone number and a website that did not load. Nevertheless, when I visited about three days after opening day, the store was full of customers.

VIEW: A walk through Al Premium supermarket

At 75,000 square feet, Al Premium is the eighth store operated by the Oriental group of supermarkets. At first glance, it’s a typical, attractive and well-organized Asian supermarket, with the mandatory selection of unusual (to me) fruit and vegetables, the always-present live seafood room, where staff will filet a purchase to your liking, and the increasingly common hot prepared foods section.

But Al Premium clearly wants to live up to its tag line (“Get ready to be dazzled by a celebration of diversity”) and claim that it caters to 14 different cultures.

As an example, the hot food counters are separated into Chinese dishes on one side and South Asian foods on the other. Purchases from these areas can be taken home or eaten in the adjacent café, which was packed the day I was there. Another difference from typical Asian supermarkets is the presence of a certified Halal service meat counter.

And there’s more: Al Premium features a cosmetics boutique, a fresh-cut vegetables section (where staff do the cutting for you) and a well-stocked organic produce area.

Walking the aisles, I found food from China, Japan, Thailand, Korea, India, the Philippines, Mexico and even the Middle East and the Mediterranean region. And, of course, Al Premium carries the typical fare from familiar Canadian suppliers.

READ: Mealtime with ethnic Canadians

I wouldn’t say I was “dazzled” by Al Premium’s diversity. But I certainly got the impression that it is more diverse in selection and merchandising than a lot of Asian supermarkets. Most ethnic families in Scarborough should be able to find something here from their homelands.

Like most Asian supermarkets in Ontario, Al Premium gets the majority of its dry groceries from Young & Young Trading Company, an Asian wholesaler in business since 1958, based in Scarborough. Also like many Asian supermarkets, Al Premium is located in an abandoned retail store (this one a former Rona building centre).

But whether it’s in an old or new building, Asian supermarket growth is contributing to a sudden increase in the square footage devoted to groceries in Canada, after years of little change.

More Asian square footage, plus Walmart’s ongoing expansion and Target’s arrival in Canada, will push grocery square footage into the stratosphere. So it’s more than sales from these companies that negatively affects traditional grocers; it’s the competition from more groceries on more shelves trying to woo customers.

Wow, are the coming years going to be fascinating!

George Condon is Canadian Grocer’s consulting editor

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