As the costs continue to pile up, Empire, the parent of Sobeys, is pumping the brakes on expanding its e-commerce service, Voilà.
What happened: This week, the grocery giant announced it would delay the opening of its online grocery distribution centre in Vancouver and ended its exclusive partnership with Ocado, a tech company that retrofits warehouses with grocery-grabbing robots.
- Voilà sales grew 23.5% in the fourth quarter, its highest-ever sales growth since launching in 2020, but the service is still not profitable.
Why it matters: Online delivery has been hailed as the future of the grocery sector. Empire taking a step back from its e-commerce expansion goes to show that the market for grocery delivery hasn’t grown quite as quickly as expected after the boom in demand during COVID.
- While a third of Canadians currently shop online for groceries, less than 5% get the majority of their groceries from delivery services.
- One Bernstein analyst told Bloomberg that the low volume of online orders has made running these pricey automated facilities less cost-effective for grocery chains.
Bottom line: As more consumers try to rein in their grocery bills wherever they can, delivery has become a luxury not everyone can afford.—LA