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ETHNIC SUPERMARKETS TAKE OFF IN MULTICULTURAL CANADA
By Susan Thorne
Step into a T&T Supermarkets store, and it becomes immediately apparent that Canada, like the U.S., is a country of immigrants.
Emigration surges from Hong Kong and mainland China have made Asians the largest visible minority group entering Canada in the past 20 years.
Certainly, Canada’s Asian market is sizable and growing. Statistics Canada, the government census agency, predicts that by 2017, South Asian and Chinese immigrants together will number about 3.6 million, constituting more than 10 percent of the total Canadian population of 34.6 million. That will be up from 6.5 percent in 2001, the latest census.
Yet, aside from a few Chinese-owned malls in the Greater Toronto and Vancouver, British Columbia, areas showcasing mainly Chinese merchants, Canadian shopping centers have not targeted the Asian customer. Now, however, Richmond, British Columbia-based T&T Supermarkets is providing a link to this growing market segment.
T&T has re-created the Asian grocery business, which has traditionally been housed in smaller shops in Canada’s urban and suburban Chinatowns, with a modern supermarket format. Its stores, which measure between 21,000 and 65,000 square feet, sell about 20,000 different food items, including unusual and exotic fruits, jasmine rice and live Australian king crab. Founded in 1993 in Richmond, T&T has stores in Canada’s two largest shopping centers — West Edmonton Mall and Metropolis Centre, Burnaby, British Columbia — and in 10 other locations from Vancouver to Toronto, of which seven are shopping centers. The company says it plans to expand further in the country.
“The grocery business is a highly competitive, mature sector,†said company CFO Kam Choi. “The key to our success is differentiation —being able to meet the needs of the Asian customer.†T&T maintains a lower price point than other grocers through volume purchases of Asian specialties and by operating with a tighter profit margin, he says. Chainwide sales per square foot exceed C$500 ($414). That is about 20 percent higher than similar-size competitors in the Toronto area achieve, according to GRS, a Calgary-based retail real estate management consulting firm.
To be sure, the company needs a broad selection to serve its core customers, who, besides ethnic Chinese, include Filipinos, Japanese, Koreans, Thais and other Asian nationalities. “They all want to find their favorites, like in their home countries,†Choi said. T&T stores respond to this demand, and how. There are specialties not found in mainstream grocery stores, such as live fish and shrimp, red-bean ice-cream bars and freshly prepared foods from the in-house delis, bakeries and sushi bars. Take-out counters offer hot dishes such as rice congee (a breakfast rice “soupâ€), prepared dumplings, steamed buns and stir-fries. All of these can be taken home or eaten on the premises.
It is unusual for an ethnic specialty concept to achieve secondary anchor status at malls, but landlords say T&T enhances the merchandise mix and adds a new shopper demographic. “They help us reach an ethnic market that we might otherwise have lost out on, or would not have penetrated deeply enough,†said Brian Castle, senior vice president of the Western region for Ivanhoe Cambridge. Castle has had direct experience with T&T at Metropolis Centre, where he says the supermarket’s sales performance is strong, and at Coquitlam Centre, in Vancouver. He also observed the way two struggling neighborhood centers — Impact Plaza, in Surrey, British Columbia, and Pacific Place, in Calgary, Alberta — were revitalized when T&T became a tenant in 1998 and 1999, respectively. “These cases are a credit to them [T&T] in terms of the success and traffic they bring,†he said.
At West Edmonton Mall, the T&T supermarket is part of the Chinatown-themed attraction area that was added to the center in 2002. The store has sparked significant cross-shopping on the part of Asian customers, particularly those under 50, says center manager Gary Hanson. “I see a lot more of that younger generation going to stores like Club Monaco here, so our retail tenants are benefiting,†Hanson said. T&T’s presence boosts business at the nearby casino and the mall, because Asians shop for food more frequently than other customer groups, perhaps as often as five times per week, Hanson says.
Asian customers predominate, but non-Asians, drawn to the exotic merchandise, can make up as much as 30 percent of T&T’s customers at some stores. “They’ve got tanks of fish in there, ducks hanging up — that’s retail entertainment,†said Hanson.
The T&T at Promenade Center, in Toronto’s Thornhill district, has Jewish, Italian and Russian communities all around. The store, which opened in 2002, is performing well, says Choi. Nonetheless, future T&T units will follow concentrations of Asian population in Canada’s larger cities, with the Toronto area being a main focus (Choi envisions eight or more stores there), followed by Ottawa and possibly Montréal. Next year the company will open its eighth Vancouver store plus one store each in Calgary and Toronto.
Tom Leung, president of GRS, a Calgary-based retail management consulting firm, considers T&T a well-managed company with a strong retail concept for the Asian niche market. “Those consumers generally prefer recognized North American brands, but traditional tastes prevail in food shopping,†he said. Value is even more important than selection for these grocery shoppers, he says, and T&T is well positioned for this mind-set, with prices from 5 to 10 percent below those of the competition. He suggests that T&T will realize higher returns by owning its store sites, as national supermarket companies are increasingly doing (the store at Yaohan Centre, in Richmond, is company-owned), and reaching out to more mainstream customers. But expert personnel with Asian background will be needed to serve the core customer base, so the company’s ability to recruit such help may determine how fast and how much it can expand, Leung says.
Supermarket competitors may be targeting a larger share of the Asian shopping basket. Ivanhoe Cambridge’s Castle says some mainstream supermarkets in British Columbia are becoming more oriented to the ethnic Asian niche market with tanks of live fish and the like. And Leung estimates that Loblaw’s Real Canadian Superstores now allot as much as 5,000 square feet of their 100,000 square feet of floor space per store to Asian foods.
By Susan Thorne
Step into a T&T Supermarkets store, and it becomes immediately apparent that Canada, like the U.S., is a country of immigrants.
Emigration surges from Hong Kong and mainland China have made Asians the largest visible minority group entering Canada in the past 20 years.
Certainly, Canada’s Asian market is sizable and growing. Statistics Canada, the government census agency, predicts that by 2017, South Asian and Chinese immigrants together will number about 3.6 million, constituting more than 10 percent of the total Canadian population of 34.6 million. That will be up from 6.5 percent in 2001, the latest census.
Yet, aside from a few Chinese-owned malls in the Greater Toronto and Vancouver, British Columbia, areas showcasing mainly Chinese merchants, Canadian shopping centers have not targeted the Asian customer. Now, however, Richmond, British Columbia-based T&T Supermarkets is providing a link to this growing market segment.
T&T has re-created the Asian grocery business, which has traditionally been housed in smaller shops in Canada’s urban and suburban Chinatowns, with a modern supermarket format. Its stores, which measure between 21,000 and 65,000 square feet, sell about 20,000 different food items, including unusual and exotic fruits, jasmine rice and live Australian king crab. Founded in 1993 in Richmond, T&T has stores in Canada’s two largest shopping centers — West Edmonton Mall and Metropolis Centre, Burnaby, British Columbia — and in 10 other locations from Vancouver to Toronto, of which seven are shopping centers. The company says it plans to expand further in the country.
“The grocery business is a highly competitive, mature sector,†said company CFO Kam Choi. “The key to our success is differentiation —being able to meet the needs of the Asian customer.†T&T maintains a lower price point than other grocers through volume purchases of Asian specialties and by operating with a tighter profit margin, he says. Chainwide sales per square foot exceed C$500 ($414). That is about 20 percent higher than similar-size competitors in the Toronto area achieve, according to GRS, a Calgary-based retail real estate management consulting firm.
To be sure, the company needs a broad selection to serve its core customers, who, besides ethnic Chinese, include Filipinos, Japanese, Koreans, Thais and other Asian nationalities. “They all want to find their favorites, like in their home countries,†Choi said. T&T stores respond to this demand, and how. There are specialties not found in mainstream grocery stores, such as live fish and shrimp, red-bean ice-cream bars and freshly prepared foods from the in-house delis, bakeries and sushi bars. Take-out counters offer hot dishes such as rice congee (a breakfast rice “soupâ€), prepared dumplings, steamed buns and stir-fries. All of these can be taken home or eaten on the premises.
It is unusual for an ethnic specialty concept to achieve secondary anchor status at malls, but landlords say T&T enhances the merchandise mix and adds a new shopper demographic. “They help us reach an ethnic market that we might otherwise have lost out on, or would not have penetrated deeply enough,†said Brian Castle, senior vice president of the Western region for Ivanhoe Cambridge. Castle has had direct experience with T&T at Metropolis Centre, where he says the supermarket’s sales performance is strong, and at Coquitlam Centre, in Vancouver. He also observed the way two struggling neighborhood centers — Impact Plaza, in Surrey, British Columbia, and Pacific Place, in Calgary, Alberta — were revitalized when T&T became a tenant in 1998 and 1999, respectively. “These cases are a credit to them [T&T] in terms of the success and traffic they bring,†he said.
At West Edmonton Mall, the T&T supermarket is part of the Chinatown-themed attraction area that was added to the center in 2002. The store has sparked significant cross-shopping on the part of Asian customers, particularly those under 50, says center manager Gary Hanson. “I see a lot more of that younger generation going to stores like Club Monaco here, so our retail tenants are benefiting,†Hanson said. T&T’s presence boosts business at the nearby casino and the mall, because Asians shop for food more frequently than other customer groups, perhaps as often as five times per week, Hanson says.
Asian customers predominate, but non-Asians, drawn to the exotic merchandise, can make up as much as 30 percent of T&T’s customers at some stores. “They’ve got tanks of fish in there, ducks hanging up — that’s retail entertainment,†said Hanson.
The T&T at Promenade Center, in Toronto’s Thornhill district, has Jewish, Italian and Russian communities all around. The store, which opened in 2002, is performing well, says Choi. Nonetheless, future T&T units will follow concentrations of Asian population in Canada’s larger cities, with the Toronto area being a main focus (Choi envisions eight or more stores there), followed by Ottawa and possibly Montréal. Next year the company will open its eighth Vancouver store plus one store each in Calgary and Toronto.
Tom Leung, president of GRS, a Calgary-based retail management consulting firm, considers T&T a well-managed company with a strong retail concept for the Asian niche market. “Those consumers generally prefer recognized North American brands, but traditional tastes prevail in food shopping,†he said. Value is even more important than selection for these grocery shoppers, he says, and T&T is well positioned for this mind-set, with prices from 5 to 10 percent below those of the competition. He suggests that T&T will realize higher returns by owning its store sites, as national supermarket companies are increasingly doing (the store at Yaohan Centre, in Richmond, is company-owned), and reaching out to more mainstream customers. But expert personnel with Asian background will be needed to serve the core customer base, so the company’s ability to recruit such help may determine how fast and how much it can expand, Leung says.
Supermarket competitors may be targeting a larger share of the Asian shopping basket. Ivanhoe Cambridge’s Castle says some mainstream supermarkets in British Columbia are becoming more oriented to the ethnic Asian niche market with tanks of live fish and the like. And Leung estimates that Loblaw’s Real Canadian Superstores now allot as much as 5,000 square feet of their 100,000 square feet of floor space per store to Asian foods.
