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Amazon’s move also stands to transform the mechanics of grocery distribution, as Canadian companies who deliver online grocery orders use their own fleet of trucks or outsource delivery to others.

“Amazon is exploring product delivery with drones,” Charlebois said. “And it is 16 times more expensive to run a fleet of trucks, between labour, energy and time, than it is to use drones.”

All three grocery chains in Canada sell online to an extent. At IGA stores in Quebec, Sobeys delivers to home and offers in-store grocery pickup of online orders. Rival Metro has introduced a similar program in and around Montreal. Loblaw is doing a test market run of a “click-and collect” model, where customers order and pay online and pick up items outside selected Loblaw stores.

Walmart, meanwhile, began online delivery of fresh groceries to some areas of Toronto in March, after introducing in-store pickup at selected markets across Canada. Costco offers home delivery on some fresh and frozen food items as well as pharmacy, and health and beauty items.

Weston told analysts and investors in February that Loblaw, the country’s biggest grocery and pharmacy retailer, might experiment with grocery home delivery at some point, but added, “I don’t think anybody has reached that conclusion that it is the best path forward for grocery.”

Shares of Loblaw, Sobeys’ owner Empire Co. and Metro all fell slightly at market close Friday, by 3.6 per cent, 3.6 per cent and 2.8 per cent respectively. In the U.S., grocery stocks took a far bigger beating. Supervalu plunged 14.4 per cent, Kroger fell 9.2 per cent and Costco fell 7.2 per cent.

“I think you are seeing grocery stocks move lower because of all the uncertainty,” said Britanny Weissman, retail analyst at Edward Jones.

Regardless of whether other retailers offer click and collect or home delivery, she added, it leads to lower profit margins. “Canada has been slower to adapt to selling groceries online (than the U.S.), but as Amazon grows its presence in grocery, they will do that much more in sales, and that could lead to price competition at other grocery retailers.”

Financial Post

hshaw@nationalpost.com

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