Walmart on a quest to be Canada's No. 1 grocer

Lucy Martins' shopping cart is full of food and a few toiletries. She's loading up for a family road trip and chose to do it at Walmart.

"Easier for me, one shot deal," she explains.

Martins says she's at Walmart almost every week and always picks up some type of food item from snacks to spicy Thai-flavoured tuna.

"It's hard to find in some places. They always have it here and it's always a good price."

More Canadians are turning to the big box giant for at least some of their food shopping. And that's helping U.S.-based Walmart take a big bite out of the traditional grocery store market.

"It's comfortable, good prices," says Castor Sousa, who divides his grocery shopping between Walmart and the neighbourhood supermarket.

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Walmart's share of the grocery store pie could grow even bigger, predicts Sylvain Charlebois, a professor at Dalhousie University specializing in food distribution and policy.

He says the retail chain's mission is to become Canada's number 1 food retailer, a feat it has already achieved in the U.S. "Based on the pace that they currently have, it is an achievable goal."

Walmart gains ground

Walmart Canada's same-store sales have continually grown over the past eight quarters.

Andfood sales at general merchandise storeswhere Walmart and Costco dominatecontinue to grow faster than sales at traditional supermarkets.

Food-industry analyst Kevin Grier crunched the numbers from Statistics Canada. He found that the dollar value of food sales from grocery stores increased by two per cent in the first quarter of 2016, compared to the same period in 2015.

That's at a time when overall food price inflation rose by 4.5 per cent.

However, food sales from general merchants jumped by 11 per cent.

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Grier also found that those growth figures have remained fairly consistent over the previous five years. Grocery store sales are stillhigher than general merchant food sales, but that thegap keeps shrinking, he says.

"It's astounding," says Grier, with Kevin Grier Market Analysis and Consulting in Guelph, Ont. "The data tells me Walmart and Costco are doing a fantastic job in terms of generating food sales."

Walmart's traditional strategy is to compete on price, an approach it takes in grocery as well asin consumer and household goods.

"Walmart Canada's mission is clearwe want to save Canadians money to help them live better," a Walmart spokeswoman said in response to a request for comment from CBC News.

Can Walmart surpass Costco?

According to CIBC Institutional Equity Research estimates, Costco has 10 per cent of the Canadian food market, and Walmart has seven per cent.

But Charlebois predicts that Walmart will eventually come out ahead. He says U.S.-based Costco has done an impressive job enticing shoppers by offering them deals on buying in bulk. But the professor says a bulk-based retailer can only grow by so much.

Ten to 15 years ago, the design of the store wasn't very appealing for food- SylvainCharlebois, food policy expert

"You do eliminate a great deal of the market when you need a car, you also need space at home, and you need a large freezer."

Charlebois also points to Walmart's efforts to woogrocery shoppers with more than just the promise of low prices.

"Ten to 15 years ago, the design of the store wasn't very appealing for food," he says. "When you walked into a Walmart, you almost had to feel desperate to buy anything."

He says that has changed now that the retailer's supercentres have adopted a layout similar to a traditional grocery store. "It is clearly deliberate. I think people want to buy food when they feel they're in a certain environment."

At the Toronto Walmart CBC News visited, fresh fruits and vegetables are displayed on the periphery of the grocery section, just like in a traditional supermarket.

Bunches of bananasand tubs full of oranges and apples greet shoppers as they enter the store.

Although Walmart's grocery section is typically not as large as a big-box supermarket, the offerings are variedfrom Halal meats to pre-cut fruit platters.

Consumers change shopping habits

Megan Bell says she only started groceryshopping at Walmarta year ago. "I was a bit leery in the past. And I would just buy certain things there, but never groceries."

However, that has changed. She has discovered she likes the retailer's Italian bread and finds the fruits and vegetables are fresh, especially the cherries she bought on a previous trip.

"They're nice, fat. And, I'm telling you, almost every one in the bag was good."

Walmart has expanded the number of supercentres that offer groceries, now making up about 300 of its more than 400 stores in Canada.

It's also ramping up its efforts to sell groceries online."Our e-commerce business [in Canada] ... continued to grow nicely with the expansion of online grocery in the Greater Toronto Area," Walmart chief financial officer Brett Biggs said during aconference call in May.

Charlebois notes that traditional grocers are also upping their game to compete.

Grocery price war

Loblaw,Canada's largest grocer, iscurrently embroiled in a price war with its suppliers to lower costsand pledges to pass on lower pricesto consumers.

Itis also expanding into urban markets with smaller stores and by selling fresh food at many of its Shoppers Drug Mart locations.

Charlebois says Loblaw continues to innovate with its line of President's Choice products and Sobeys with its focus on fresh food.

But the battle for your grocery dollar remains tight. Industry analyst Griernotesthat, according to Statistics Canada, Canadians are not spending more on food. "We've been flat-lining," he says.

And while Walmart's forte may not be innovative new products, says Charlebois, there is one thing it has excelledat: "stealing [marketshare] from other players."