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Originally Posted by Kilgore Trout
That's a good point. It's one thing to have a suburban-style supermarket near downtown and quite another to have a bunch of supermarkets that are smaller but more geared towards urban lifestyles. Many people who live in dense areas tend to walk or bike to get their groceries several times a week, so they don't necessarily need a one-stop-shop kind of megastore.
Just for example, here in Montreal I have five small or medium-sized supermarkets within a 10 minute walk of my apartment, with a big-box style supermarket about 15 minutes away. There's also a half-dozen small food stores like fishmongers, butchers, greengrocers and other specialty shops. I almost never go to the big-box store because all the small and medium-sized stores meet my needs pretty well.
I really noticed the difference when I stayed with my friends who live in Toronto near Lansdowne subway. It's a pretty dense area, not all that different to where I live in Montreal, but there are no small greengrocers nearby. The only choices for groceries within a 15 minute walk are suburban-style Sobeys, FreshCo, Loblaws and Wal-Mart, all of which have big parking lots and aren't very pedestrian-friendly.
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That's it. Canada's major grocery chains aren't capable of serving urban areas because top to bottom they're oriented towards being suburban, drive-n, all-things-to-everyone mini-wholesalers. Economies of scale--selling SUVs full of groceries at a time--are central to their business model; they aren't set up to make money off people walking in and buying four or five items, so they actively discourage that kind of purchasing. When they attempt to make urban-format stores, they end up jacking up prices to make up the difference and they inevitably fail.
Contrast this to discount grocery chains like Aldi, Lidl, Spar, that you'll find on almost every block of European cities. Their business is based on turning over stock. Every piece of stock is a loss until it sells, so they're set up to make sure that doesn't happen, with limited selection focused on the affordable provision of those four or five items you want to buy daily and carry home.
This model could work in Canadian cities too but the supply chain isn't there. It might be a smart thing for Canadian mayors to put together a concerted effort to attract this kind of grocery chain. I'm pretty sure Lidl already operates in the NE states, so it's not a huge stretch.