The Supply Side: Walmart marks 30 years in Canada; gross revenue up 1.8% from previous year

It’s been 30 years since Walmart acquired 122 Woolco stores in Canada from Woolworth for about $300 million. That was Walmart’s inaugural leap into Canada. Fast-forward to 2024, and Walmart Canada operates 400 stores and distribution centers and employs about 100,000.

Last year, Walmart Canada reported gross revenue of $6 billion, up 1.8% from the previous year. Food and consumable sales outpaced general merchandise sales. The business also reported that 10% of its sales were digital.

When Walmart entered Canada in 1994, it had to build a distribution network and convert the smaller discount stores into supercenters where more groceries could be sold. The older Woolco stores were akin to the Walmart discount stores in the U.S., and while they were busy with customers, the inventory they could handle was limited.

Walmart went into Canada on a mission to bring prices down, and within two years, the average basket price of consumable goods fell by 8%, according to a study by Deloitte.
The first supercenters opened in Canada in 2006, modeled after U.S. stores that offered fresh groceries and general merchandise under one roof. By 2008, Walmart had 300 stores in Canada. Much of the business plan was modeled after the U.S., as in-store eye-care centers were opened, and the online business was launched in 2011.

Stewart Samuel, director of retail futures at IGD, said Walmart is perceived as one of the price leaders in Canada. It competes on price with the three domestic retailers who operate discount formats as part of a broader portfolio that includes supermarkets and drugstores.

“Walmart Canada’s Supercentres have broadly resembled the format of their U.S. counterpart in terms of store size, layout and product offer, but since last year, they have adopted the same design concept that is being rolled out in the U.S. This is leading to much more uniformity between the two countries, although the product mix is unique to each country. The supercentre is unique in the Canadian market, and while Loblaw operates a similar format, Real Canadian Superstore, Walmart has a significantly larger non-food offer,” Samuel noted.

IGD said grocery market share data in 2023, which included supercenters and excluded drugstores or wholesale formats, shows Walmart ranked third with 15.5% of the share, behind Loblaw at 22.8% and Sobeys at 18.3%. Samuel said other grocery chains trailing Walmart include Metro at 10.1% and Pattison Food Group at 4.3%.

Overall, the retail market share of Walmart Canada falls somewhere around 8%, compared to about 29% for Loblaw, according to Statista. Walmart’s effort to bring Sam’s Club to Canada was a miss, and all six locations were closed in February 2009.

In similar situations where market share gains were slow-growing, Walmart sold its interests. In 2020, the retailer sold ASDA in the United Kingdom for $8.8 billion after more than 20 years in that market.

Scott Benedict, CEO of Benedict Enterprises, said the most formidable competitor to Walmart in Canada is Loblaw, and they had a big head start. He said Walmart runs the Canadian business much like the one in the U.S. when it can do so. Walmart has mostly focused on groceries, especially since Sam’s Club failed.

GROWTH OPPORTUNITY
One area where he believes Walmart can grow its Canadian business is through more omnichannel and digitally enhanced grocery offerings like those that have been successful in the U.S. Samuel agreed, saying Walmart continues to grow its e-commerce business, both its grocery and non-food operations.

“Store pickup is an integral part of its e-commerce operation, with the retailer continuing to innovate with new solutions to improve the experience for customers and simplify processes for store associates. At its flagship store at the Square One Mall in Mississauga, it offers a new showroom experience for large-scale items like patio furniture and BBQs. By scanning a QR code to make a purchase, items are available at Pickup as soon as they have completed their shopping, facilitating a fast and easy experience,” Samuel said.

Since 2020, Walmart has invested more than half of the $3.5 billion it earmarked to update stores, enhance distribution, introduce the store of the future and a new health care hub.

“Walmart Canada has the ambition to be the most trusted retailer for Canadians,” said Gonzalo Gebara, CEO of Walmart Canada, in a statement. “This is what we’ve worked toward for the last 30 years. We’re excited to welcome our customers into our modernized stores and for them to experience the future of Walmart Canada, no matter how they choose to shop with us.”

Samuel said Walmart is the leader in one-stop shopping, offering a broad range of food and non-food essentials. Its customer proposition in the Canadian market is unmatched, especially how it can deliver this in an omnichannel way.

“There is scope for Walmart to grow its grocery private label business in Canada, where it operates mainly with the Great Value brand. Its competitors have invested significantly in this area. Loblaw, with its President’s Choice brand, is considered one of the global leaders for private label development and innovation,” he said.

Samuel said Walmart Canada follows a similar sales pattern to the U.S. stores with grocery leading the way. He said Walmart continues to invest in its fresh food and supply chain. Global foods are also an important element of the mix, reflecting Canada’s ethnic diversity.

“As part of the retailer’s efforts to reflect the communities within which it operates, it has also recently introduced a ‘Hot Kitchen,’ offering hot food-to-go, and a seafood counter and wet room in selected stores,” Samuel said.

HEALTH CARE
While Walmart Health clinics were not financially viable in the U.S., the model continues in Canada, where it has a broader public approach to health care access. Alex Herd, vice president of Walmart health care services in Canada, said the retailer operates 400 pharmacies, 72 medical clinics and 200 eye-glass centers.

Herd said in 2023, all provinces approved pharmacists to diagnose and prescribe care for minor ailments like pink eye, sore throat or urinary tract infections. He said because pharmacists located inside Walmart stores already have a relationship with customers, they are a natural extension for providing minor care.

“With the serious shortage of primary care options across the country, customers need accessible, low-cost options like our pharmacist services that can free up health care clinics for more serious cases,” Herd said.

He said Walmart integrates the vision center, pharmacy and clinic setting into one hub and appointments can be booked online with the digital pharmacy app. He said consumers can start the app and describe their symptoms and the app personal assistant will guide them to the right level of care. That could be a virtual appointment, seeing the pharmacist for a quick test, or perhaps a clinic visit with the medical professional.

Herd said Walmart Canada is also piloting a digital dietician that can work with consumers needing those services.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Firebend.