Supermarket sweep

While their classmates and colleagues prepared for classes and attended lectures earlier this month, Jennifer Leslie and Andrew Baynham instead spent the first few couple days of May making trip after trip to the local supermarket. Over the course of two days, they racked up a nearly $11,000 bill, filling up dozens of grocery carts with bags of Ruffles, boxes of cereal and tins of coffee.

Each time the Volkswagen SUV they'd borrowed was crammed full, they'd drive back to the University of Guelph campus to deposit the bags in a second-floor research lab. Inside that lab, they were building their own supermarket.

Ms. Leslie and Mr. Baynham are both research assistants in a project run by Guelph agricultural economics professor Michael von Massow. Under his direction, the group has quietly, over the course of the past few weeks, built a 1,200-square-foot "research" grocery store inside of the school. The focus of that research is simple: Can they rebuild the supermarket?

Like a real supermarket, theirs has a cereal aisle, a potato chip aisle and a canned food aisle – shelves piled high with jars of tomato sauce and soup. There are refrigerators full of egg cartons in the back.

But nothing here is for sale.

In the next few months, the lab will welcome its first "customers." As they move through the lab taking part in different shopping experiments, the researchers will watch from surveillance cameras set up in every aisle.

Prof. von Massow and his team will take careful notes on how customers negotiate the space, what they stop to look at and how they make decisions on what to place inside their grocery carts.

With the customers wearing a $30,000 (U.S.) eye-tracking device, the research team will be able to capture in precise detail what each shopper spends time looking at – whether it's the ingredient list on a box of cookies, the amount of sodium on a package of crackers or the price difference between two brands of yogurt.

As an academic, Prof. von Massow's interest isn't simply in selling products. Rather, he (and Longo's, the grocery chain helping fund the project) want to better understand what people are looking for in supermarkets – how they make choices and why.

Every so often, the team will change the design of the lab. They'll refashion it as a discount store with store-brand products and sale signs, or as a high-end, health-focused store. They'll reconfigure the aisles or product placement to see how those changes affect consumer choice. They'll also try out dramatically new ideas, such as bringing in farmers to sell their products directly.

The hope is to figure out whether the traditional supermarket can be redesigned to better suit today's consumers. "We have more choices now," Prof. von Massow said. "So how do we keep people engaged with grocery stores?"

Across the country, grocers are grappling with that same question.

One after another, traditional food retailers have had to fend off new competition from the likes of Wal-Mart, Costco, ethnic grocers and even dollar stores. Sears, too, has announced its intent to enter the grocery game – not to mention new entrants to the food market, such as UberEats. Meanwhile, the threat of the as-yet-unknown plans of AmazonFresh, already in place in certain U.S. cities, hangs overhead.

But what preoccupies Prof. von Massow most is a bigger, more fundamental question. Does the traditional, 30,000-square-foot grocery-store model – an idea first developed around the 1950s housewife – still make sense for our diverse marketplace? And can the model simply be adapted to changing demands, or is it in need of a dramatic overhaul?

"Is this the death of the grocery store?" wrote Sylvain Charlebois, dean of the faculty of management at Dalhousie University, in an op-ed in The Globe and Mail a few years ago. He was frustrated at the time with what he saw as the industry's sluggishness to keep pace with changes.

These days, he's a bit more measured. He's still impatient for change, but cognizant of efforts that are being made. "What was holding the industry back is the industry itself," he said. "There's a bit of an awakening going on."

'The grocery store of 1975 is dead'

A young woman pushed her shopping cart down the frozen-food aisle of a Loblaws store in east end Toronto one recent Saturday. As she stood surveying the ice-cream selections, the nineties pop hit Stay (I Missed You) by Lisa Loeb began to play in the store. The woman perked up, a smile spreading across her face. She sang along and knew every lyric.

The store's playlist that afternoon was no coincidence. The song was a moderate hit when it was first released, but its cultural significance lies in its lasting popularity amongst a small, but very specific demographic – namely older millennial women, between the ages of roughly 30 and 35.

Still, the song barely seemed to register with two other customers standing just one aisle over – a man with greying hair studying the price of maple syrup and a middle-aged woman eyeing a magazine rack.

Therein lies the challenge for modern supermarkets. It used to be that these stores were the exclusive domain of just one group: the housewife. "Everything was oriented toward the classic middle-class family," said Harvey Levenstein, a retired McMaster University history professor.

Over the years, supermarkets developed a sophisticated template to attract that target customer and maximize what she placed in her cart. Everything from music (the slower the tempo, the longer the time spent in-store), to lighting (the brighter, the more products handled), to layout (the more products she walked by, the better) was designed with her in mind.

But things have changed.

"The grocery store of 1975 is dead. It's been dead a long time," said Anthony Longo, whose family started the namesake grocery chain in 1956. "The consumer has changed."

Look around any supermarket today and you're just as likely to see men, or retirees, or young people shopping for just themselves, or for families of all sizes.

This week, Dalhousie University researchers, led by Dr. Charlebois, released a study filled with data on the idiosyncratic eating habits of Canadians.

Amongst Dr. Charlebois's findings: Single people in B.C. are especially likely to skip breakfast; men are more likely to eat dinner at a restaurant than women; and people in the Atlantic region are more likely than anywhere else in the country to eat lunch at their desks.

Taken collectively, the study illustrates just how fragmented the market in Canada has become. Aside from age, gender and location, the study also showed differences in eating habits based on everything from level of education obtained and income, to household type.

Grocers have responded in part by diversifying their offerings. Most major grocers now have their own discount lines. Some, too, have purchased or partnered with ethnic grocers to reflect the changing faces of Canadians.

And while most grocers have taken a cautious approach to online sales, they've begun in recent years to expand their offerings, with Longo's Grocery Gateway and Loblaws' Click and Collect programs.

To differentiate from their discount lines, the mainline, or "conventional" supermarkets, meanwhile, have moved toward a more upscale market, with sushi stations, oyster bars and gleaming gourmet cupcake displays.

But the trickiest balance has been in juggling the many different initiatives aimed at the many different demographics.

Some stores have experimented with making signs and font sizes bigger to appeal to baby boomers, for example. Others, such as Metro, emphasize health and wellness – a concern that is top of mind for this group – building a "natural dispensary" of health supplements inside one Toronto store. But this same supermarket is located in Toronto's condo-filled Liberty Village, meaning such changes must be made without alienating the hordes of 20-somethings who also frequent the store.

"We ask our merchandisers to do cartwheels sometimes," Mr. Longo said. "It's a balance."

To attract millennials – who value convenience above all else, according to numerous surveys – grocers have increased their "to-go" sections. And because millennials tend to spend shorter periods at stores (but visit more often), these sections are generally placed toward the front of the store so that shoppers can pop in and out quickly.

In the past two decades, these ready-made meals and other "convenience" offerings have gone from practically non-existent to taking up about 20 per cent of the shelf space in his stores, Mr. Longo said.

Others, such as Sobeys, have tried to attract the idealism of millennials by aligning themselves with social movements. By partnering with celebrity chefs such as Jamie Oliver and his "better food" movement, they've attempted to differentiate themselves as selling a better-quality product.

These attempts have been met with varying levels of success, independent food analyst Kevin Grier says. Figures released this week show the market share that traditional grocers have been losing to Wal-Mart and Costco is finally slowing. Still, traditional grocers' share of food sales has shrunk from about 90 per cent in 2004 to just less than 80 per cent last year. In the same time, the share of general merchandisers such as Wal-Mart and Costco has more than doubled.

The strategy of many of these retailers is undermined by the fact that they all seem to be doing the same things, Mr. Grier said. "They're all trying to talk about where the food comes from – the food, the story, all that," he said.

"It's all in a desperate attempt to differentiate. But if they're all trying to differentiate, how different is it?"

The European model

The answer, according to some, is Europe.

"Europe has a great preponderance of smaller format stores," said Stewart Samuel, program director at grocery expert IGD in Vancouver. He said chains such as Tesco, with 3,000-square-foot stores, are a good model for North American supermarkets to consider.

Other European chains, such as the discount grocers Aldi and Lidl, have already begun spreading in the United States.

Prof. von Massow, too, thinks Canada will eventually move toward the European model. But this will require customers to change their expectation of endless choices and endless supply.

In Europe, an empty produce shelf is a sign of a good store, he said. "In the consumer's mind is 'They're selling lots, and the stuff is fresh.'" In Canada, meanwhile, we still expect row upon row of shiny apples and oranges. "It has to be full, and if it's not it must not be good."

To Prof. von Massow and others, it's obvious that change is happening – it's just a question of whether retailers are moving quickly enough. He's also aware of the fact that, for real-life grocers, implementing change is not as simple as in his lab.

Standing in the middle of the cereal aisle, he cocks his head to the side, imagining new ideas for the shelves. "What if we put the yogurt in the middle, between the sugary cereal and the healthy cereal?" In a real grocery store, this would require complicated logistics. But it's this precise kind of experimentation that his lab is for.

He has a long list of other ideas to test. The dairy industry has been trying to promote chocolate milk as a "rapid recovery" beverage, in the same category as sports or energy drinks. What would happen, he wondered, if he placed it next to the Gatorade?

Or instead of simple tweaking, what if he did something dramatically different – such as displaying banners containing nutritional advice next to certain products, or information about environmental sustainability?

Or what if some of the aisles – all of the aisles, even – were removed completely?

"The footprint here is flexible," he said. "The things we can try are really only limited by our imagination."

With a report from The Canadian Press