What if WIND happened to Food or Drug Retailing in Canada?

  • Originally Posted in December 2009

    In case you missed it, last week the CRTC approved the application by Globalive to launch a mobile phone network in Canada to compete with Bell, Rogers and Telus who control 95% of the market today.

    What makes this interesting is just how many people thought it would be impossible for a foreign company to enter this (non) competitive market and challenge the existing and homegrown duopoly. The CRTC proved them wrong.

    I am in Venice, Italy this week and WIND is everywhere. This company competes with the big operators such as Vodaphone and TIM and is winning.

    WIND is strong here in its home market of Italy and also in Greece. Just tonight from the hotel to the restaurant I passed three WIND stores!

    This got me thinking about Food and Drug Retailing in Canada. What would happen if a big foreign retailer decided to take on our duopolistic Food or Drug retailers?

    In Canada we tend to think that no one can top Loblaw, SDM or Walmart. They are the biggest of the big.

    I think that Canada is prime for a new entrant such as the Hard Discount retailers Aldi and Lidl in Germany.

    Not only do both retailers rank in the Top 10 biggest retailers in the world, they are growing at breakneck speed.

    They also do not need a lot of space to set up their small, focused and efficient stores. They usually grow in clusters of 25 stores that spring up around one central warehouse. A few years ago in Hungary, Aldi opened nearly 30 stores in one day with an instant market share hit to the big players there.

    As a supplier, is your company ready to react to a potential game changing customer in Food or Drug? What would your product offer be? How would you manage their aggressive pricing model? Where are your potential weaknesses?

    By the way, it is not impossible. Both Aldi and Lidl have expressed interest in the Canadian market.

    In fact, Aldi already has over 1000 stores in the US and is growing. They are at our doorstep.

    Imagine if these international retailers came to Canada and showed the big three the impact a true Hard Discount model can make.

    I bet you No Frills, Food Basics and Price Chopper have a reaction plan in place just in case. Or they better have.

    Will you?

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