Yes, you should pay attention to ethnic grocers

Over the next 10 years Canada’s population is expected to grow by around seven or eight million people. Of that, however, only three million will be from births and four or five million will be from immigration. From long before Confederation immigrants have been vital to Canada and they also drive retail sales, which will only increase as their numbers rise. It is estimated that over the next decade, some $12 billion in additional grocery store sales will be attributed to immigrants.

Everyone is aware that over the past decades the face of immigration has changed from predominantly European to predominantly Asian (South Asian, Filipino, Chinese, Korean, West Asian and Arab), as well as blacks and Latin Americans. These visible minorities are impacting grocery sales in Canada to an extent greater than most grocers are aware.

When they come to Canada, these ethnic shoppers bring with them the traditions and cultures of their homelands. That’s why instead of shopping at conventional grocery stores, they seek out local stores operated by their own ethnic groups. These stores sell their familiar brands and unusual items not carried by regular Canadian grocery stores.

Conventional supermarkets may try to cater to their ethnic neighbours by offering token numbers of ethnic products and by marking special ethnic events such as Chinese Lunar New Year and Ramadan. But it really isn’t enough. Ethnic shoppers are savvy and extremely price-aware. As a result, the only conventional Canadian supermarkets they tend to patronize in large numbers are the hard discounters.

Visible minorities are impacting grocery sales in Canada

Today, more minorities are moving to the suburbs. That includes people who are relatively new to this country. According to some studies, it can take as few as four years from arrival for immigrants to establish themselves and buy property. That is because immigrants tend to be well educated and they’re willing to live with extended family members. As a result, there are a number of large suburbs made up of ethnic groupings.

Smart ethnic retailers (largely Chinese and Korean) are extremely aware of these pockets of ethnicity and are quickly building stores in those areas to serve these customers. The supermarkets they are building are modern, large, well-stocked with products familiar to the clientele, merchandised the way their customers are comfortable with and feature cheaper price points than those found in conventional Canadian outlets.

Grocery sales through such ethnic supermarkets are difficult to judge, but Perry Caicco of CIBC World Markets, estimates their sales at between $4 billion and $5 billion per year, while B. K. Sethi of B. K. Sethi Marketing, an ethnic food distributor, figures their sales are between $2 billion and $3 billion. Whatever the actual number is, it represents substantial sales lost to conventional food stores. It is likely impossible for conventional Canadian supermarkets to recapture any of those ethnic sales.

But there are ways of winning more ethnic customers. Loblaw did it by acquiring T&T, the largest Chinese supermarket chain in Canada. Metro has appointed a category manager for ethnic products and has hired an outside agency to help them better understand South Asian consumers.

The real trick is to be more proactive in your nearby ethnic community, offer products they want on a permanent basis, include local ethnic stores in your price checks, and maybe even hire a store manager who reflects the community.

Over the next 10 years, about 70% of the growth in Canadian consumer spending will come from visible minorities. We can either leave it to the ethnic stores or try to capture a fair share of it. We shouldn’t ignore it.