Why it's difficult for international low-cost grocers to open stores in Canada

Many of you have pointed this out that international grocers should set up shop in Canada to increase competition and combat rising food prices. So I asked food industry researchers about how that could work. They said it’s really hard for international players to open a grocery chain here and make it profitable. There’s two main reasons for that Canada size and the dominance of certain companies. Just think of Targets failed Canadian expansion. It closed every store in less than two years, even though they’re a massive American chain with money. We’ll get into that more later. In Canada, 5 supermarket chains make up nearly 75% of the retail grocery market. Compare that to the US, where more than 20 players make up the same market share. Lately, the lack of competition in our grocery store industry has been hot button issue. We’ve made several videos answering your questions about it, including this one. Lack of competition. The Canadian government has made a list of 12 foreign grocers they want to try to convince to open stores here. The Wall Street Journal was the first to report this based on an access to information requests. The industry minister says he’s trying to bring in more competition into the grocery market because more choice can lead to better prices. We asked him about the discussions he’s had with those grocers so far. Why? I’m not giving you specifics. You know, I tend to do the work before I do the announcements. Am I going to succeed? I don’t know, but it’s worth trying. But these food industry researchers remain skeptical. They said the government just wants to be seen doing something to make food more affordable. But we’re seeing here is lip service to try to attract international player. The first thing they’re going to ask is what’s the return on investment? And it’s a bit of a challenge. It’s a bit of a tough sell would require a massive dollar investment into this market. And for what return. They both point to some of the issues. We touched on earlier as to why Canada is a tough sell for international grocers. First, to set up your distribution, your supply chain. That would be very, very costly. And here’s the thing, Canada’s population is also much smaller than the US, with 80% of people living in big cities that are super spread out. So it means more work to supply your stores, more work to reach customers. At the end of the day, they’re going to make less money because there are fewer shoppers. The other issue? Canada already has big players who dominate the market and make it very difficult for international grocers to survive. NES, Costco and Walmart are international players who were able to break into the market and make a profit because of their business models. They revolutionized large scale distribution logistics and were able to use that blueprint to succeed in Canada. According to the experts I talked to, but Target, as we mentioned, didn’t see the same success. An international supermarket chain would face similar types of situation, but the truth is, many of us can’t reach a Costco or a Walmart unless we organize a carpool or pay $20.00 for an Uber. And apparently luring International Grocers into Canada is lip service. So what’s there left to do? These market analysts say there is a solution, a Local 1 to combat rising food prices that the government should be focusing their efforts on instead of trying to lure in foreign grocers. We’ll get into that in the next video.