Why is Walmart expanding into groceries?

Rotman’s David Soberman on the new era of supermarkets.

In early February, Shelley Broader, CEO of Walmart Canada, announced her chain was moving fully into the grocery business. Walmart’s Canadian stores had added full grocery lines to some of its larger outlets, but Broader’s plan now is to inject $500 million into expanding the number of Walmarts that offer groceries.

So, Canada will have hundreds of additional grocery stores added to what seems to be a full complement already, with Loblaws, Metro, Sobey’s, Longo’s, Costco and the discount stores related to some of these chains.

Are we at the point of market saturation?

We asked Professor David Soberman for his thoughts. Soberman is a professor of marketing and the Canadian National Chair of Strategic Marketing at U of T’s Rotman School of Management.

Q. Almost all Walmarts will soon offer a full line of groceries. Don’t we have enough grocery stores already?

No. The simplest explanation for why Walmart is entering the grocery market is that the population of Canada is growing, so we would expect there to be an increasing number of grocery stores.

A lot of people perceive this as being a massive increase to the number of chains but if you go back 20 or so years ago you had IGA, Food City, A&P, Dominion, and Loblaws. The bottom line is that even in those days we had five or six chains.

The major difference today is that there is a broadening of the product lines that are carried by the traditional grocery stores and, more recently, by those that previously did not sell groceries, like Walmart and Target. I’d include Costco in that group too.

Q. So it’s more about the product line, not the number of chains?

Right. The focus today is on combining a variety of product lines that used to be offered in separate stores. One-stop shopping is the key now.

People used to separate their grocery shopping from other shopping. So you might go to a mall to do Christmas shopping, for example, or to buy clothing or school supplies for your children. But for your groceries, you would have to make a separate trek to the supermarket.

Now, it’s all being combined. Evidence for this change in shopping behavior comes by thinking about the product lines carried in a traditional supermarket like Loblaws. They’ve vastly expanded their product line with Joe Fresh, which is a whole section dedicated to clothing. You can also buy all sorts of household fix-it products in Loblaws. That section used to be about 12 feet long and it’s much bigger now. In addition, most supermarkets contain pharmacies where you can get prescriptions filled. Loblaws perceives itself as not just competing for your supermarket dollar but also for your dollar for clothing and doing things around the house.

That’s the main reason Walmart is expanding into groceries. They already carry household products and clothing. The bottom line is that people will be spending an increasing amount of their shopping dollars in a place like Target or Costco if they carry groceries. Potentially this can put Walmart in a bit of a pickle because they have something like 400 stores but half of them don’t really have complete grocery sections. Now they are ramping that up so that the majority of their stores include the full grocery section. The idea is that when people think of going grocery shopping they’ll actually go to Walmart.

It’s also interesting that many of the Walmarts are located in malls where there’s also a supermarket. This means that even within malls there is an added dimension of competition and this is a departure from the past.

This might result in people not just deciding which mall to go to, but with a Walmart supermarket and another supermarket in the same mall, they might decide which part of the mall to go to in order to do their shopping or where to park their car.

Q. How do grocery stores distinguish themselves? Don’t they really all offer pretty much the same products?

No, I think they do actually create distinct images. Sobey’s, Loblaws and Metro all have discount stores, so that enables them to compete by reaching different audiences. And even the discount versions, like FreshCo, No Frills and Food Basics, each offer a somewhat different approach from each other in the discount sector of grocery shopping.

But the gold standard is Loblaws. They’ve created very much their own image with their pioneering efforts in private labels, with President’s Choice and No Name, and the collection of products they’re offering. That approach has really helped them to create differentiation.

Q. Still, I drive through the city and I see a grocery store every few blocks.

But pay attention to how physically close they really are. You have to remember that retailing is largely a location-based competitive context. This is the reason why when you look for a Sobey’s store you tend not to find a Loblaws store right next door. These stores know how to compete and they find locations that are under-served.

One of the things about grocery shopping is you don’t want to have to travel too far to do it. This enables each of these stores to create their own retail trading area. As I say, they know how to compete and one of the ways they compete is by not competing. And they do that by not co-locating.

Q. Is the same approach taken in all retail sectors?

The grocery markets don’t co-locate but it’s very different from what you see in the clothing industry. In Toronto, for example, there’s the Mink Mile on Bloor Street, just west of Yonge, where you find all the high-end clothing shops, like Armani, Boss, Harry Rosen and Holt Renfrew. They are all located next to each other.

Or at a big mall like Yorkdale, you find all the more popular clothing stores in one part of the mall. That’s because people go in there to shop for clothing and those retailers know that when people are in the mind to shop for clothing they want to be there.

But they also understand the shoppers will sometimes buy multiple items from different stores. In that kind of business, you don’t have to necessarily win with each shopper every time he or she shops. You may not have the person who buys on every trip but if on one out of every three trips they buy something at your shop, then you can still create a successful business. It’s a very different form of business when you’re a supermarket.

Q. What about the higher-end grocery stores, like Pusateri’s and McEwen? Do they make a difference to the overall grocery industry?

This is called segmentation. In cities like Toronto, Vancouver, Calgary or Montreal you have a certain segment of the population, maybe 5 or 10 percent, who are high income earners who like to spoil themselves with exotic foods or imported items that cost a bit more but that offer different tastes and experiences. This is not the sort of thing sold en masse by a Sobey’s or Metro because the turnover isn’t there and these kinds of products are not part of their model.

In contrast, the objective of a Pusateri’s or a McEwen is precisely to allow shoppers to find the exotic foods or imported items that cannot be found elsewhere. They charge a higher price so they don’t need the volume of a prototypical supermarket: as long as a specialty grocer like Pusateri’s has a steady flow of customers, the business model is viable. Whatever big city you go to you’ll see these types of stores. In London, England, you see Fortnum and Mason and in Paris, you see Fauchon which is the same sort of shopping experience, for wealthier people who want special jam or imported escargots imported from a certain region of France. But these grocery stores don’t have a negative influence on the business of the larger chains.

Any final thoughts?

We’re going to see a lot of change in the retail environment. Target is maybe having a harder time here than they imagined. But on the other hand, coming into a country and trying to make your organization fit the Canadian marketplace is something that cannot be done overnight. Overall, Canadians have a wide selection of places where to do their shopping. It’s convenient to be able to go to a Walmart or Costco and buy many different types of products and get things done all at once. So I think this is a good development for customers.

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Cat and rabbit: a ...

Sandra Annett | February 1, 2015

  In 2003, a trio of South Korean artists known as “SamBakZa” or “The Three Beats” posted a short Flash animation to their website, recounting a story of forbidden love between a cat and a rabbit. The story was so upbeat, the pace so frenetic that the cartoon borders on manic. Still, There She Is!! (which comprise the original cartoon plus four follow-ups) touched nerves all around the world: The cartoon has been watched more than 12 million times since its release. There She Is!! is based on a manhwa (comic) called One Day which was drawn by SamBakZa member Sogong. What is it about this odd little cartoon series that struck such resonance? In this excerpt from her book Anime Fan Communities: Transcultural Flows and Frictions (Palgrave Macmillan, 2014) Sandra Annett explores the cartoon's viewer community through the hundreds of posts and comments they've left behind. She theorizes that the medium itself might be the mechanism that allowed this story to reach so many people.   “Love at First Site”: these words are the subject line of a post made to the SamBakZa.net bulletin board on February 2, 2006. The poster, “Rae,” has just seen the music-video-style Flash cartoon “There She Is!!” (2003), which will come to form the first episode of a five-part series also called There She Is!! S/he has also just discovered that the site has a public bulletin board moderated by the SamBakZa team’s lead animator, Amalloc. At this point, there are 767 Original Posts (OPs) on the board, some with dozens of comments. Rae decides to post as well. Writing in English, Rae is slightly in the minority: over half of the posters coming to the board in 2006 write in Korean (398 OPs), though English trails not too far behind (276), and Japanese is relatively well-represented (89 posts, compared to just 3 in Spanish). “Love at First Site,” Rae puns (or simply misspells?) in the subject line. The post continues: I just happen to come across your site in the wee hours of the night . . . stumbled across a video that was made, and let me just say I fell in love! Though I don’t understand the lyrics, the music is wonderful, the art is beautifully done, and it made me very happy just watching it. Thank you for such a wonderful site, and keep up the good work! (Ellipses in orig.) Rae never became a regular commenter, but the sentiment expressed here and the particular way of expressing it is common for the SamBakZa.net bulletin board. This unremarkable, everyday sort of fan posting has two features which are among the key aspects of transcultural animation fan communities online: first, a mixture of emotional engagement and reflexivity, and second, a focus on issues of language. In the first case, notice how along with praising the art and animators, Rae also remarks on the online environment itself. The post begins with an account of finding the website—“stumbling across it” at random—and concludes with thanks, not just for the animation but for the “wonderful site.” The text and the conditions of its viewing meld into one affective experience: “it made me very happy just watching it.” This experience is spontaneous and immediate in its visuality, happening at first sight, and yet it is also self-consciously mediated and linguistic, as it happens on a site, with Rae bringing attention to the act of viewing a video and then expressing opinions on the board. At the same time, the experience is not limited by language, as Rae adores the short even without understanding the lyrics of the Korean pop song that structures it. Commenters posting in other languages express similar ideas. In November 2004, a regular Japanese poster called “Chiumi” suggested that Flash, by going beyond words, can allow all the people of the world to be deeply moved, so that by coming to this page they can feel as if a “new language” (“atarashii gengo”) is coming into being. So I very, very much respect Mr. Amalloc for being able to use that “new language.” Like Rae, Chiumi remarks on both the Flash animation and the act of “coming to this page,” which allow an affective coming-together “beyond words.” Chiumi’s portrayal of Flash animation as “going beyond words” is grounded in a reading of SamBakZa’s animation, since all five shorts have no dialogue and tell their stories through a combination of visuals and musical rhythms. It is also a perfect example of the kind of longing for a visual language capable of connecting “all the people of the world” that has accompanied the emergence of new media from film to the Internet. -from Anime Fan Communities: Transcultural Flows and Frictions (Palgrave Macmillan: 2014), pages 149-150. © Sandra Annett, 2014. Republished with permission.

To err is human. ...

Patchen Barss |

Recently, Brock University convened three researchers for a podcasted panel discussion on wellbeing. One of those researchers, Kathy Belicki studies how and why we forgive those who have done us wrong. Her research suggests that the effect on your wellbeing depends on why you work to forgive someone we love for hurting us. Below are excerpts from her contribution to the podcast discussion. (Headings have been added for clarity:   On the relationship between well-being and forgiveness: KB: In terms of well-being, in my research I’ve focused on emotional and physical health. Some forms of forgiveness  seem to result in better emotional and physical health. Some other forms of forgiveness definitely don’t; they can leave you feeling quite a bit worse off. Some forms of forgiveness help to restore a relationship and that could be a good thing if it’s a good relationship, but if it’s a toxic relationship that could be a very damaging thing. If we flip it around, unforgiveness is definitely not good by anyone’s standards. Feeling really angry can be empowering, but it’s not a pleasant emotion. It’s very hard on the body and it also takes a toll on relationships because no one wants to be around someone who’s angry all the time. On forgiveness and our need to be connected to those we love: KB: We are fundamentally social beings. Good social ties are connected to better emotional well-being, better physical health. For people who forgive in order to feel better, forgiveness usually means some type of process of letting go, moving on; they may never even talk to the person that hurt them. Oddly enough, we found in our research, forgiveness is not doing much for them. But it's different for  people who forgive for some reason outside of themselves – for example, “Forgiveness is good for the world so I’m going to struggle with this." They’re not forgiving to feel better, but they feel better than the people who forgive in order to feel better. On other things we work to get over:  KB: I’ve also studied trauma. Following trauma, sometimes people come to a new understanding about life that they just didn’t have before, a greater appreciation for the value of peacefulness instead of the highs, for contentment, for meaning. Not uncommonly, it’s after those awful things in life that sometimes people, for the first time, struggle to find a sense of meaning and a sense of connectedness. So these things are intangible and they sure don’t cost money; they do take effort, but they’re apparently worth the struggle. On what we can do about it all: KB: One thing we can really do for ourselves is to strengthen and develop relationships, good relationships. And then one of the realities of those relationships is if you know me long enough I’m going to hurt you. If I know you long enough you’re going to hurt me, and so we need to find some way to navigate that. When we’re the person who hurts, [that means] being prepared to apologize or do what needs to be done to mend that. If I’m the person who has been hurt, certain forms of forgiveness can be useful. In a nutshell, the reasons you choose to forgive are important. Forgiveness that is for noble reasons – for the betterment of humanity, to help this person who has hurt you or a simple recognition that all humans make errors – is the kind of forgiving that we have found associated with well-being.   These excerpts have been edited for brevity and clarity, and are published here with permission. Full transcript is available. 

The promise(s) of ...

Maxine Myre |

“I will be more attentive to you in private and public so you realize how much I care” “I will sacrifice some time I would usually spend with other friends or my hobbies to be with you. “I will surprise you with loving gestures such as sending affectionate texts, offering backrubs, making dinner, buying you a favourite food or beverage” These are just some examples of promises often made in romantic relationships. In this Q and A, Johanna Peetz, a researcher at Carleton University, talks about her research of such  promises, and what makes people more likely to keep them. Research Matters: How exactly do you define a close relationship? Johanna Peetz: Usually when we say close relationships, we think romantic relationships. I would argue that the same processes apply to almost any close relationships, including a close friend or a close family member. In our studies, we limited to romantic partners because we are very sure that they want to make each other happy. RM: What are the main factors that you found contribute to overpromising? JP: Love for the partner, loving feelings, motivation to make them happy… all that warm and fuzzy stuff predicts if you will promise a lot. But personality variables such as conscientiousness predict whether or not you actually do the things you promise. People who report to love their partner a lot promise a lot but are not more likely to follow through. Overpromising is actually linked to loving your partner more. This is counterintuitive, right? Because if someone breaks their promise to you, you think they don’t love you enough, but they might just love you too much and that’s why they’re making promises they can’t possibly keep. RM: Why do you think that happens? JP: Well I think that happens because we underestimate all the other factors that affect our behavior. We construct the best-case scenario of how we will accomplish our goals, we get seduced by all our intentions, and forget about all the other things that might affect what we want to do. As an example, for the promise ‘I will call you every night when I’m gone on vacation’, you might really intend to call your partner every night. But then there’s just never time. You’re with other people. There’s no way out of the social situation. The phone service in a different country doesn’t work. Things that you didn’t foresee  prevent you from fulfilling your promise. RM: Is there a type of person that does consider all these different factors? JP: Yes. Conscientious people. They’re characterized both by being more cautious in promising and also by being better able to follow through. They plan for contingencies, and form plans to deal with those contingencies. They might sign up in advance for a plan that allows them to call from another country. The higher you are on conscientiousness personality traits, the better you are at following through. RM: How common are people with these personality traits? JP: About a third of our sample  didn’t fall short all that much on their promises. RM: So we’re not all doomed to break our promises in love? JP: Not at all. I don’t want to give you the impression that it’s a negative message. When your partner breaks a promise, you might want to jump to the conclusion they don’t love you. Instead, you might think about what they promised: was it a something that requires sustained behaviour over a long period of time? If yes, then it might not have been they were unmotivated. Their personality might be such that they find it difficult to follow through on long-term goals. So you might want to give them some slack!

Bad backs and good ...

University of Waterloo staff |

  Newly published findings from the University of Waterloo are giving women with bad backs renewed hope for better sex lives. The findings—part of the first-ever study to document how the spine moves during sex—outline which sex positions are best for women suffering from different types of low back pain.  The new recommendations follow on the heels of comparable guidelines for men released last month. Published in European Spine Journal, the female findings debunk the popular belief that spooning—where couples lie on their sides curled in the same direction—is the best sex position for all women with low back pain. “Traditionally, spooning was recommended by physicians to all individuals with back pain because it was thought to reduce nerve tension and load on the tissues,” said Natalie Sidorkewicz, the PhD candidate at Waterloo who led the study. “But when we examined spine motion and muscle activity, we found that spooning can actually be one of the worst positions for certain types of back pain.” The pioneering research combined infrared and electromagnetic motion capture systems, like those used by filmmakers for full computer graphic character animation, to track how 10 couples’ spines moved when attempting five common sex positions. The findings were used to create an atlas, or illustrated set of guidelines that recommends different sex positions based on what movements trigger a patient’s pain. The atlas suggests that women who are extension-intolerant, meaning those whose back pain is made worse by arching their backs or lying on their stomachs, for example, replace spooning with the missionary position. Adding a low-back support, such as a pillow, can also help keep the spine in a more neutral position. For women who are flexion-intolerant, typically those whose back pain is made worse by touching their toes or sitting for long periods of time, the atlas recommends spooning or doggy-style sex where the woman is supporting her upper body with her hands, not her elbows. “What we know now is that sex positions that are suitable for one type of back pain are not appropriate for another kind of pain,” said Sidorkewicz. “These guidelines have the potential to improve quality of life—and love life—for many couples.” According to Statistics Canada, four of every five people will experience at least one episode of disabling low-back pain in their lifetime. Up to 84 per cent of men with low-back pain and 73 per cent of women report a significant decrease in the frequency of intercourse when suffering back pain. “Primary care physicians report it is common for couples to seek their advice regarding how to manage their back pain during and after sex. Many couples will remain celibate because the pain resulting from one night of lovemaking lasts months,” said Professor Stuart McGill, of the Faculty of Applied Health Sciences at Waterloo. “Now doctors have solid science to guide their recommendations.” The next phase of the study will involve recruiting patients with different categories of back and hip pain, as well as additional sex positions, to further develop the recommendations.

“I already know how ...

University of Waterloo staff |

There is no point faking it in bed because chances are your sexual partner will be able to tell. A study by researchers at the University of Waterloo found that men and women are equally perceptive of their partners’ levels of sexual satisfaction. The study by Erin Fallis, PhD candidate, and co-authors Professor Uzma S. Rehman and Professor Christine Purdon in the Department of Psychology at Waterloo, identified sexual communication and ability to recognize emotions as important factors that predict accuracy in gauging one partner’s sexual satisfaction. The study was published in the journal Archives of Sexual Behavior this month. “We found that, on average, both men and women have fairly accurate and unbiased perceptions of their partners’ sexual satisfaction,” said Fallis, the study’s lead author. “We also found that having good communication about sexual issues helped participants to understand their partners’ sexual satisfaction. However, even if sexual communication was lacking, a person could still be fairly accurate in gauging his or her partner’s sexual satisfaction if he or she was able to read emotions well.” The study involved 84 couples that were part of a larger study on sexual functioning and satisfaction. Fallis separated the partners, asked them to each report on their levels of commitment, relationship satisfaction, sexual satisfaction, sexual communication and measured their emotion recognition abilities. Couples in a sexual relationship develop what psychologists call a sexual script, which forms guidelines for their sexual activity. “Over time, a couple will develop sexual routines,” said Fallis. “We believe that having the ability to accurately gauge each other’s sexual satisfaction will help partners to develop sexual scripts that they both enjoy. Specifically, being able to tell if their partners are sexually satisfied will help people decide whether to stick with a current routine or try something new.” As well as affirming important factors for healthy sexual relationships, the study’s findings may help to reduce a common stereotype in our culture that women and men have difficulty communicating with and understanding one another. “The next step in this research is to look at the impacts of having more or less accurate perceptions of one’s partner’s sexual satisfaction over time in long-term relationships," said Fallis. “We expect that having a more accurate understanding of one’s partner’s sexual satisfaction will have positive impacts for both partners’ sexual satisfaction and we’re eager to test this idea.”
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