Sylvain Charlebois: The quiet transformation of Canada’s grocery industry

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The grocery business in Canada is changing quietly but profoundly. While public debates focus on food prices, carbon footprints, and “greedflation,” the country’s three dominant food retailers — Loblaw, Sobeys, and Metro — are re-engineering how Canadians access and experience food. Each is pursuing a distinct strategy, shaped by technology, real estate, and consumer behaviour, that will define the next decade of retail.

Loblaw remains a strong player, not only in size but in its ambition to integrate every element of the consumer experience — from data to distribution. Its transformation has accelerated since 2023. Through Shoppers Drug Mart, the company has effectively created a new format in Canadian retail: the health-focused micro-supermarket. Fresh milk, produce, and ready-to-eat meals now occupy space once reserved for cosmetics and pharmaceuticals. It’s a logical response to modern habits: Canadians are shopping more frequently and in smaller quantities, often close to home or work.

This shift gives Loblaw a powerful advantage in proximity retailing. With over 1,300 Shoppers locations, the company can reach consumers where traditional grocery stores are either unprofitable or physically constrained. These stores are now doubling as last-mile hubs for e-commerce orders through PC Express and DoorDash, blurring the lines between pharmacy, grocery, and logistics. It’s a model that reflects how urban lifestyles have evolved — less time, smaller households, and a stronger preference for convenience.

Sobeys, the second-largest player, has chosen a different path. Its focus has been on digital transformation through Voilà, an automated e-commerce platform powered by British firm Ocado’s robotic technology. Sobeys bet early on centralized fulfillment rather than in-store picking, and that bet is starting to pay off. By controlling the process from warehouse to doorstep, Sobeys can offer consistent pricing and product quality while managing labour and logistics costs more effectively. The company has opened large robotic fulfillment centres in Toronto, Montreal, and Calgary, supported by smaller “spoke” facilities to serve regional markets and independent grocers within its network.

While Loblaw’s omnichannel model integrates physical stores with data, Sobeys’ approach is closer to a digital supply-chain company that fosters integrated partnerships. It’s less visible to consumers but potentially more efficient. In economic terms, Sobeys is investing in back-end innovation — automation, logistics, and scale — while Loblaw invests in front-end innovation, or how the consumer experiences food retail. Both are trying to solve the same problem: how to deliver more value per dollar spent while defending margins in a low-growth, high-cost environment.

Metro, by contrast, has remained measured. Its strategy has been grounded in operational discipline and regional focus rather than national reinvention. The Montreal-based grocer continues to prioritize steady network growth, private-label development, and targeted store renovations. Metro’s recent investments in automated distribution centres in Ontario and Quebec, particularly for fresh and frozen products, show a pragmatic embrace of technology — but not at the scale of its rivals.

What Metro lacks in national reach, it compensates for in agility. Its network density in Ontario and Quebec allows for efficient distribution and strong supplier relationships. The company’s continued success with banners such as Super C and Food Basics illustrates how smaller, low-cost formats can thrive without the complexity of omnichannel infrastructure. From an economist’s perspective, Metro represents a textbook case of market segmentation: focus on core regions, protect margins, and avoid overextension.

All three companies are also investing heavily in sustainability and logistics modernization. Loblaw’s 2026 rollout of autonomous middle-mile delivery trucks with Gatik AI is the most ambitious, aiming for 50 driverless vehicles in the Greater Toronto Area. It’s a significant operational experiment — one that could lower costs and emissions if scaled successfully. At the same time, the company is building one of Canada’s largest rooftop solar installations at its East Gwillimbury distribution centre, signalling that energy efficiency is becoming a cost-control strategy, not just a corporate responsibility measure.

Sobeys, meanwhile, has been expanding its own sustainability agenda by introducing more electric delivery vehicles through Voilà and adopting automated warehousing systems that reduce energy consumption. Metro, while less vocal, continues to emphasize waste reduction and packaging initiatives — incremental moves that reflect its more conservative capital-allocation style.

The three strategies mirror their corporate cultures. Loblaw acts like a data company that connects all parts of the business. Sobeys behaves like a logistics enterprise leveraging technology to protect efficiency. Metro remains a disciplined regional retailer committed to reliability and local sourcing. None of these approaches is inherently superior; they reflect different paths toward resilience in a highly competitive, cost-sensitive market.

From a policy and consumer perspective, the implications are significant. Loblaw’s data-driven model raises questions about privacy and competition — how much information a single firm should hold about what Canadians buy, where, and when. Sobeys’ automation strategy invites scrutiny over job impacts in distribution and warehousing. Metro’s focus on regional density underscores the continued importance of local supply chains and smaller suppliers in a market dominated by national giants.

It’s also clear that consolidation of power remains a concern. The top three grocers already control more than 60 per cent of Canada’s food retail market, and their respective investments could widen the gap with independent grocers. Automation, AI-driven merchandising, and data analytics all require scale — something smaller competitors cannot easily replicate. Policymakers will need to consider how innovation and market concentration interact in shaping food affordability and accessibility.

Still, innovation in retail is not inherently negative. Loblaw’s proximity model, Sobeys’ robotics, and Metro’s regional optimization all reflect a broader evolution toward a more adaptive and responsive grocery sector. Consumers are likely to benefit from improved freshness, reduced waste, and a greater range of shopping options. The challenge for regulators, suppliers, and economists alike will be to ensure that these efficiencies translate into lower prices and better service — not just higher margins.

That is why the forthcoming Grocery Code of Conduct, expected to take full effect in 2026, matters. Properly implemented, it has the potential to level the playing field between large grocers and their suppliers by establishing clearer rules, predictable payment terms, and dispute-resolution mechanisms. Over time, such a framework could make the industry more supply-chain-friendly — encouraging collaboration rather than confrontation, giving smaller producers fairer access to shelves, and ultimately expanding choice for consumers. If the code achieves what policymakers and industry leaders intend, it could turn a period of corporate innovation into one of genuine competition — an outcome that would benefit everyone along Canada’s food value chain.

Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.