As home cooks increasingly prioritize convenience, and competitors from Walmart and Amazon to Canadian startup Goodfood deliver meal kits to their doorsteps, Loblaw is creating a new division tasked with getting ahead of changing grocery habits.
Canada’s largest grocery retailer is staffing up a new “meal solutions” division, which “spans across [the company’s] business,” said Loblaw spokesperson Catherine Thomas in response to questions from The Logic. Among its goals: conquer the Canadian meal prep market.
“Our vision is to create an inspiring portfolio of easy and nutritious meal solutions for consumers,” reads one of several postings for jobs in the division.
The company, which operates more than 2,300 stores and has reported earnings of $36.5 billion so far this year, is currently running a meal kit pilot project under its President’s Choice brand. PC Chef meal kits appeared early this fall in 13 stores in the Greater Toronto Area—including Loblaws, Real Canadian Superstore, Shoppers Drug Mart and one No Frills location—and are available to purchase from these stores through PC Express, its grocery pickup service.
A ready-to-cook meal kit is a pilot project of Loblaw’s new division, getting the company into one of the fastest-growing food sectors in Canada. Loblaw will now be competing for a space in the growing industry with meal kit providers like Montreal-based Goodfood, which has 900,000 subscribers across the country, as well as international players Blue Apron, HelloFresh and Plated, which have all brought their services to Canada. Loblaw is also moving into meal kits before giants Walmart and Amazon, who dominate the grocery market in the U.S., introduce their offerings north of the border.
As Canadians change they way they cook and eat—and thus how and whether they buy groceries—the meal kit business has become among the fastest-growing food sectors in Canada, according to the market research firm NPD Group. It’s roughly doubled since 2014, expected to top $400 million over the next year. The firm reports 13 per cent of Canadians having used meal kits at some point, and interest is growing—42 per cent said they were interested in trying one.
“At 4 pm most days, the vast majority of Canadians don’t know what they’re having for dinner. We believe we are uniquely capable of helping them solve that problem,” Thomas said, adding that it was too early to gauge how customers were responding to the pilot.
Loblaw is facing growing pressure from Amazon and Walmart, which dominate the U.S online and brick-and-mortar grocery markets, respectively. Walmart provides grocery pickup and delivery in nearly every U.S. state and already has a roughly 23 per cent share of the country’s grocery business—about 2.5 times greater than its closest rival, according to a Morgan Stanley report from earlier this year. Seventeen per cent of U.S. shoppers also say they’ve ordered groceries from Walmart online, a business that’s becoming an increasing focus of its e-commerce efforts. Amazon, meanwhile, has tried to pair its extensive online services with a physical presence, buying the Whole Foods grocery chain in 2017 and launching its own branded grocery shop. This year, the two giants have been locked in a battle over low delivery prices.
Though neither has moved as aggressively in Canada, they have begun investing in Canadian expansions. Walmart debuted a “scan-and-go” app in May to speed up the checkout process, and expanded its online grocery-delivery service in partnership with Instacart in August. While Walmart and Amazon sell meal kits in the U.S., neither company has yet launched their offerings in Canada.
Loblaw’s PC Chef kits come with pre-measured—and in some cases, pre-prepared—ingredients and a recipe card. They’re advertised with the slogan “We’ve solved dinner so you don’t have to.” The line currently includes eight meal offerings, including a vegetable pad thai and a chicken souvlaki platter.
Whatever Amazon and Walmart do in Canada, Loblaw will also be competing for a space in the growing meal kit sector against domestic providers like Goodfood, and international specialists Blue Apron, HelloFresh and Plated, all of which have brought their services to Canada and offer delivery services.
Montreal-based Goodfood Market was one of the first domestic players to establish itself nationally. The company services 200,000 Canadians coast to coast, delivering over one million meals every month. In a November investor presentation, Goodfood estimated the ready-to-cook market to be worth approximately $3 billion.
“Goodfood has built a strong brand and a complete online meal solutions and grocery platform. Fewer than 4 per cent of Canadian households are receiving meal solutions delivered directly to their home and there is a significant opportunity to grow that number in the coming years,” CEO Jonathan Ferrari told The Logic in an emailed statement.
“Technology is driving an increased convergence of consumers’ need for convenience and health with the trends in various food industry segments,” Ferrari said. This change in behaviour is rapidly pushing the grocery retail market online, making it “ripe for disruption.”
Loblaw isn’t the first of the traditional Canadian grocers to make a move on the space. In 2017, the grocery chain Metro acquired a majority interest in MissFresh, a Montreal-based meal kit firm. Longo’s, too, has been selling “Express” meal kits, meant to be prepared in less than 10 minutes, for almost two decades, and launched its new “Impress” line last year, described as “gourmet” meals that come with recipe cards in a box.
To beef up its meal solutions team, Loblaw is seeking marketing senior directors, product managers, a mobile developer and a product developer.
The job postings detail how Loblaw intends to use data to measure the project’s success. “You’ll measure your success with KPI’s that include adoption, conversion & retention. You will use data every single day to uncover meaningful insights that inform your experimentation strategy and ultimately, your product roadmap,” reads one posting.
One of the first tasks for the marketing directors will be to develop the “graphics, photography, personality, tone” of the new brand. After that’s complete, the product developer will put together digital and physical recipes that customers can follow, then work with the operations director to make sure the necessary ingredients are both available and used efficiently.
The venture will be headed up by a new vice-president. That person, as well as several of the senior staff reporting to them, will be tasked with working with other top staff throughout Loblaw. The position, says the posting, “requires close collaboration and influence of senior leadership teams within Loblaw to ensure strategic alignment.”