How Amazon Canada Is Chipping Away at Grocery Stores

When the king of Web retailing enters the fray, competitors should be nervous.

| More on:
The Motley Fool

By Cameron Conway

Just when Canadian grocers thought things couldn’t get any worse after the opening of Target stores in Canada, a new player has entered the grocery isle: online retail juggernaut Amazon.com (NASDAQ:AMZN).

Amazon recently announced that it had created a new Grocery and Gourmet Food department at Amazon.ca, and it boasts more than 15,000 dry food products, most of which are eligible for Prime or super saver shipping.  Since the start of the year, Amazon.ca has “more than doubled” its offerings in the grocery, auto, toys, and office categories.

In other words, in typical Amazon fashion, it’s a win for customers and a major pressure point on competitors. Unlike Target’s entry into Canada, Amazon should be striking fear in the big grocery players such as Loblaw (TSX:L), Sobeys (TSX:EMP.A), and Metro (TSX:MRU).

With 15,000 items, the range is huge, but to give a quick flavor, the next time you’re ordering a new Blu-ray, you can now also stock up on pantry necessities, baby food, local favourites like Dare cookies and Canadian maple products, and even flowers. Amazon has included many $1 and $2 items that it hopes can be easily be tacked onto what consumers may already be ordering from Amazon.

Prices on most products vary right now, but historically, Amazon has been willing to make little to no money on each sale just to crowd out the competition and win more of the consumer’s wallet.

Between, Amazon, Target, and Wal-Mart, Canadian grocery chains are facing more competition than ever. The added pressure has already sparked the mergers of Loblaw and Shoppers Drug Mart, along with Sobeys and Safeway and even synergy-partnerships such as TD Bank & Loblaws’ new Ugo mobile wallet.

With Christmas just around the corner, this could prove to be a pivotal and perhaps costly year for Loblaw and Sobeys. The question is: Are these companies prepared, equipped, and willing enough to fight a battle both on the streets and online?

One thing is clear: Whether or not shareholders win, Canadian consumers will.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cameron Conway does not own shares of any companies mentioned.  David Gardner owns shares of Amazon.  The Motley Fool owns shares of Amazon. 

More on Investing

3 colorful arrows racing straight up on a black background.
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

If you're looking to invest in stocks that can grow your money in the long term, consider these stocks that…

Read more »

concept of real estate evaluation
Dividend Stocks

The Smartest Real Estate Stocks to Buy With $1,000 Right Now 

The real estate market is a ripe investment opportunity. You can invest $1,000 in these REITs and benefit from property…

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

Outlook for Shopify Stock in 2025 

Shopify stock outperformed the market in 2024, with the share price surging 51%. What should you expect from this stock…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

The Smartest Dividend Stocks to Buy With $1,000 Right Now 

Did you receive $1,000 in holiday gifts? You could invest this money in these dividend stocks and give yourself small…

Read more »

Man data analyze
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $500 Per Month?

Are you wondering how much cash you would need to earn $500 per month in passive income? Here are some…

Read more »

shopper chooses vegetables at grocery store
Dividend Stocks

Is Slate Grocery REIT a Buy Now?

If you're looking for consistent passive income that lasts, Slate Grocery REIT looks like a strong option. But there are…

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Bank Stocks

A Canadian Stock to Watch as 2025 Kicks Off

TD Bank (TSX:TD) stock looks like a great watchlist stock for 2025.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

Strategies for Investing in Canadian Stocks After a Robust 2024

Want to invest in stocks but worried about overvaluation or volatility? These ETFs could be ideal.

Read more »