B4 | RE P O RT O N BUS I N ES S G THE GLOBE AND M AIL | MON DAY , A P R IL 6, 2020

How COVID-19 has changed grocery shopping

E-commerce embraces
safety as new marketing
angle during pandemic
as shoppers avoid stores
SUSAN KRASHINSKY ROBERTSON
RETAILING REPORTER
and vegetables and meat and
cheese, which many customers
like to see and touch to gauge
freshness.
“That’s something we hear a
lot, as a barrier to consideration
for getting your groceries deliv-
ered – that they want to pick
their own,” said Fresh City’s chief
marketing officer, Jenn Hay. The
company tries to overcome that
A survey of 1,015
Canadians conducted by
Dalhousie University
researchers found that,
as of March 23, 47 per
cent of people were
avoiding grocery stores.
were avoiding grocery stores.
That means slightly more than
half were still going out to shop,
even as the dangers of the coro-
navirus dominated headlines.
But the long-term potential for
grocery e-commerce is there,
said Dalhousie professor Sylvain
Charlebois, who researches food
distribution, security and safety.
“Based on some of the data we
Grocers have been asking cus-
tomers to be patient as they
ramp up those services.
Instacart, which operates a de-
livery service in partnership with
stores such as Loblaw banners
and Walmart in Canada, has seen
a huge increase in online orders.
“Our belief has always been
that customer adoption will con-
tinue to increase and that these

C
anadians have been urged
to stay at home to help
curb the spread of the new
coronavirus – and for many peo-
ple that has meant staying away
from grocery stores, prompting a
surge in e-commerce orders for
food and other essential items
that may have long-term conse-
quences for shopping habits.
“We don’t have a crystal ball,
but what we have seen is that
online grocery is really a habit to
be built – when customers try it,
they usually stick to it,” said Wal-
mart Canada’s executive vice-
president of e-commerce, Alexis
Lanternier. Amid public-health
messages about the need for so-
cial distancing, the company has
seen record numbers of online
orders, for both delivery and
pickup.
According to Fresh City Farms,
which operates a local delivery
service in the Greater Toronto
Area, some people are hesitant
to adopt such online services be-
cause they prefer to pick out
their own products.
That’s especially true for fruits
by offering customers a satisfac- have, people feel more comfort- brick-and-mortar grocers will
tion guarantee: If anything ar- able going to a restaurant than a continue to serve as the back-
rives on their doorstep that does grocery store, because they’re bone of the grocery industry,” In-
not meet their standards for aware more than ever that gro- stacart wrote in a statement.
quality, that item will be refund- cery stores are open systems – “The recent surge in customer
ed. everybody has access to every- demand has accelerated this
Ms. Hay predicted that people thing,” Prof. Charlebois said. adoption and made grocery de-
may become accustomed to the The surge in demand for on- livery an essential service.”
convenience of home delivery, line grocery shopping, however, But it is also an expensive ser-
but some will want to return to has exposed the fact that most vice. Brick-and-mortar grocery
stores once they have the free- retailers have not yet built e- sales in Canada have been affect-
dom to shop safely again. commerce operations that can ed in recent years by increasing
“I suspect there will be more operate on a much larger scale. competition in the discount
of a blend between e-commerce Both Metro Inc. and Loblaw space. When it comes to online
and in-store [shopping],” she Companies Ltd. have appealed to grocery shopping, however, not
said. customers who are healthy and only are there delivery fees –
Until now, grocery e-com- able-bodied to continue to shop which differ depending on the
merce has mostly been a niche at their stores – while practising service – but grocers do not offer
offering in Canada, with the vast social distancing from other the same number of weekly pro-
majority of purchases still made shoppers and staff, of course – so motions and sales that custom-
in stores. that people who are sick, have ers are accustomed to finding in
It has generally been touted as mobility issues or are vulnerable stores.
a more convenient option, but to complications from the coro- “[E-commerce] is going to
COVID-19 has changed people’s navirus can have access to online change the culture of promo-
relationships with grocery stores, ordering. tions … and that’s going to be
and e-commerce now has anoth- With long wait times for deliv- beneficial for grocers,” Prof.
er marketing angle: safety. ery or in some cases a total un- Charlebois said. “Instead of be-
A survey of 1,015 Canadians availability of service, many peo- ing bargain hunters, we’re going
conducted by Dalhousie Univer- ple trying out grocery e-com- to be thinking about our own
sity researchers found that, as of merce for the first time are find- safety, while seeking conve-
March 23, 47 per cent of people ing the experience frustrating. nience.”

Arlene Dickinson raises

$100-million to back
food, health startups
SEAN SILCOFF
TECHNOLOGY REPORTER

W
hen Dragons’ Den star Arlene Dickinson set out in
2015 to raise a $100-million venture capital fund
focused on Canadian food, beverage, health and
wellness startups, she met with skepticism. At a
time when software was eating the world, why was she pitch-
ing businesses for the world to eat, some wondered? Some
funders asked if there were enough domestic startups to
back.
“There were a lot of hurdles to overcome,” Ms. Dickinson
said. “It doesn’t matter if you are a dragon on Dragons’ Den,
raising capital is really hard.”
Ms. Dickinson has now hit her goal as concerns about food
supplies mount globally and shoppers hoard groceries. Her
District Ventures has secured $35-million in new capital, pri-
marily from federal Crown corporations Farm Credit Canada
and Business Development Bank of Canada, to reach her tar-
get. With pasta in high demand and store shelves often empty, producer Italpasta has cut back from its usual
The veteran entrepreneur, investor and author previously 63 pastas, focusing on the top six cuts in its Tradizionale range of products in an effort to to speed up the
raised the balance from George Weston Ltd., ATB Financial, production process. CARLOS OSORIO/REUTERS
Ontario Municipal Employees’ Retirement System, Bank of
Montreal, Retail Ready Foods Inc., and wealthy investors in-
cluding Canada Goose chief executive officer Dani Reiss and
Montreal’s billionaire Saputo family. Food: Retailers support manufacturers’ efforts
District not only reached its target during an economic
meltdown, but Ms. Dickinson’s thesis – that consumers want to streamline production for higher productivity
new, healthy consumables – also has held up.
While the economy reels amid the COVID-19 pandemic, FROM B1 Clayton Manness put it in a recent tic right now, said Lani Lindsay,
several of District’s investments have experienced a 30 per interview, “We’re just trying to get the company’s vice-president of
cent or higher jump in sales since early March, exceeding Ontario’s Italpasta typically ordinary flour out the door.” replenishment. One pasta sauce
forecasts, she said. makes 63 types of pasta, but the Nestlé Canada is also reducing manufacturer is now making
Those include meal-kit deliv- company is focusing on the top the number of products it makes three kinds of sauce instead of the
ery firm Les Recettes Cook it Inc.; six cuts in its Tradizionale range for the time being. “During this usual eight, for example, and a
natural, high-protein pancake of products: spaghetti, spaghetti- dynamic situation, we are careful- toilet paper maker is producing
District not only mix maker EnginLabs Inc. (oper- ni, penne, fusilli, elbows and la- ly managing our supply chain and two package sizes instead of five.
ating as Flourish Pancakes); sagne. being agile with what is produced “With each supplier, we discuss
reached its target Chickapea-brand chickpea and “We’re running the spaghetti 24 and shipped, which varies by the items our customers are look-
during an economic lentil pasta maker Earth to Kids hours a day,” said owner and pres- product and customer,” the food ing for the most and prioritize
meltdown, but Inc.; and halal meat producer ident Joseph Vitale. “People aren’t and beverage giant said in an e- [certain products],” Ms. Lindsay
[Arlene] Dickinson’s One World Foods Inc. District- so fancy right now. They just want mail. “We believe that a simplified said in a statement. “We also look
backed 16-café Balzac’s Coffee pasta.” portfolio approach enables grea- for the goods to be ordered and
thesis – that Roasters chain has taken a hit as By focusing on the core cuts ter efficiencies across the entire shipped in efficient quantities,
consumers want stores closed, but wholesale bean and pausing production on value chain in a time of crisis.” such as pallets. The strategy also
new, healthy sales are up 50 per cent. whole-grain pastas and egg noo- Manufacturers that supply gro- cuts down on handling time and
“The pandemic has created dles, the company’s manufactur- cers with household items are allows product to move faster.”
consumables – also even more urgency around Cana- ing plant can increase its output similarly changing tack. Kruger A spokeswoman for Metro Inc.,
has held up. dian production of these goods,” by operating more efficiently; it Products, the country’s largest which is a member of the UGI pur-
Ms. Dickinson said. “We all have takes about three hours to change producer of toilet paper, is mak- chasing group, said the company
to eat and take care of our health.” the mould on the pasta press, he ing only its high-demand brands is supportive of the pared-down
Earth to Kids CEO and founder Shelby Taylor said she was said. and formats: Cashmere and manufacturing approach. “It’s the
initially worried because Chickapea pasta is made under con- Mr. Vitale said the ramped-up, Purex bathroom tissue, Sponge- right thing to do in the circum-
tract in COVID-19-racked Italy. streamlined production is neces- Towels paper towels and Scotties stances,” said Marie-Claude Ba-
But with the government ensuring food manufacturers sary. One night last week, about 15 facial tissue. The company said it con, adding that the retailer is
stayed open, her focus has shifted to keeping up with de- trucks were lined up outside the is running all eight of its manufac- confident customers will still see
mand: Online orders from her Collingwood, Ont.-based star- manufacturing facility waiting for turing facilities at full capacity, enough variety.
tup spiked 1,000 per cent in March year-over-year, and by 500 a spot at one of 20 loading doors – and has also opened up old pro- And the situation is only tem-
per cent from retail distributors, as customers seek products all of which were occupied. “We’re duction lines. porary. Mr. Vitale said when life
with long shelf lives and high protein. With new customers loading all night, and all week- On the retail front, Walmart goes back to normal, the compa-
trying the product, she expects sales will remain higher after end,” he said, adding that produc- Canada has been speaking with ny will resume making cuts such
the pandemic. tion is up roughly 30 per cent. suppliers more regularly as they as rotini, rigatoni, scoobi do and
“Arlene has said for a long time the consumer packaged Prairie Flour Mills usually cope with changes in demand fettuccine.
goods space was undervalued and didn’t draw enough in- packs 35 products, but the Manito- during the pandemic. Cutting “As soon as this thing is over,
vestment,” said Ms. Taylor, who’s raised about half her $5- ba company has temporarily set down on the variety of their prod- we’ll go back to doing it all,” he
million in funding from District. “This situation is great proof some of them aside. As co-owner uct assortment is a common tac- said. “This is an emergency.”
of that. I’d imagine District is in a very good spot.”
Ms. Dickinson launched District at a time when startups
were starting to challenge CPG giants, offering healthier al-
ternatives such as organic or protein-heavy foods or selling DILBERT
directly to consumers online.
District has invested $34-million in 25 companies: Fifteen
went through its accelerator program and received $150,000
each, while the rest were more established and got $2-million
or more each.
FCC treasurer Rebbecca Clarke said the Crown corpora-
tion’s $20-million investment expands on its long-standing
practice of backing venture capitalists in the agriculture sec-
tor.
She said District’s mandate is “well aligned” with the FCC,
providing “a unique opportunity for agriculture and food en-
trepreneurs in Canada to find both the capital and expertise
needed to grow and innovate. They are filling a gap in the
marketplace.”