The appeal of the specialty grocer

Smaller boutique retailers are seeing a growth spurt as they offer convenience for more frequent shoppers.

In its report, Food in Demand, commercial real estate and investment firm CBRE made 11 predictions for the U.S. grocery industry over the next decade, including that “grocery growth will be strongest across non-traditional and specialty formats.”

On this side of the border, some small specialty grocers are experiencing growth with the announcement of expansion plans.

Fresh City (which began as a subscription-and-delivery-based food market) acquired Mabels and Healthy Butcher to grow its Toronto footprint to eight locations (with another to come this fall in downtown Toronto) and specializes in fresh and prepared food.

Vancouver’s Larry’s Market just opened, a full-service vegetarian grocery situated in a heritage location in the city’s north-end that targets “healthy, vegetable-focused lifestyles,” while independent “zero waste” grocery stores have popped up in cities from Toronto to Kelowna and have been mainstays in Quebec for a couple of years.

And in June, Organic Garage, a grocer that focuses on organic produce, as well as dairy, bakery, bulk food, meat and supplements, recently posted a quarterly sales increase of 16% and a gross profit increase of 27% year-over-year, as it makes plans to expand to a seventh location in the GTA.

According to Organic Garage founder, president and CEO Matt Lurie, his stores are “the right concept at the right time” as the grocer meets growing consumer demands for healthier food options. He adds that its competitive advantage comes from aggressive pricing in the organic foods space, and that the grocer is small yet comprehensive enough for shoppers to do full shops instead of just convenience ones.

These types of grocers are typically smaller in footprint and embedded in local neighbourhoods, with Dalhousie University grocery analyst Sylvain Charlebois saying that the convenience that boutique stores  brings is appealing to those living in increasingly urbanized areas (with suburbs growing to become more dense). He adds that ten years ago the average Canadian visited a grocer once a week – and now it is up to 2.7 times a week. In some heavily urbanized areas, Charlebois says that some grocers report seeing customers twice daily.

“People are just thinking about their next meal, not the next week,” he says, adding that ready-to-eat solution and counter segment (as part of a growing “grocerant” trend, and which is popular among the specialty grocers) is exploding right now as people are looking for a quick fix. Charlebois adds that regardless of the size of the retailer, the market will reward those that “create habits,” whether that’s sit-down restaurant adaptations in a larger format, or more on-the-go/home meal replacements (HMRs) in both large and small stores.