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How this Farm Boy is thriving with its old-school grocery model

Welcome to Canadian retail’s ecommerce holdout.

In an era when Amazon is experimenting with package deliveries by drone, Ottawa-based grocery chain Farm Boy doesn’t even offer online shopping. While online ordering is either available or in the works from big brands like Sobeys, Save-On-Foods, Loblaws, Metro, and Walmart, the only items you can order online from Farm Boy are food platters and gift baskets.

That’s just one of the ways Farm Boy is breaking the unwritten rules of retail in the digital age.

The grocery company spends less than one per cent of its sales on marketing. Instead, it relies heavily on old-school advertising like flyers and radio commercials. While many Canadian grocery stores now resemble big box aircraft hangars, Farm Boy locations range from just 8,000 to 20,000 square feet. Although you can buy clothes, jewelry and home décor items at some grocers, Farm Boy doesn’t even sell toilet paper or deodorant — just food.

Yet Farm Boy is booming. It has 26 stores in Ontario and plans to open up to 15 more in the province over the next three years. After that, the company hopes to expand across Canada.

Lessons from a stubborn Farm Boy

How has Farm Boy’s brick-and-mortar model thrived despite cutthroat competition from digital warriors like Loblaws and Walmart?

Farm Boy’s co-CEO Jeff York recently spoke at the Retail Marketing Conference in Toronto. From that keynote, we’ve compiled three of his tips for store-based success in an increasingly digital retail game.

1. Be different

Instead of following the herd, Farm Boy figures out what works for its own customers and invests in doing those things really, really well.

Since Farm Boy can’t beat Costco at what Costco does, it pretty much does the exact opposite. It focuses on freshness and quality rather than selling heaps of discounted products that shoppers buy in bulk to stockpile.

“We’re not a typical retail store where people come in once a month. We want people to come in once a day because it’s fresh [food],” York said.

Farm Boy specializes in fresh produce, prepared meals made daily from scratch (which can be eaten in-store or taken home) and health-conscious products that are organic, vegan and gluten-free.

Its website lists ingredients and nutritional info for every fresh meal sold in its Farm Boy Kitchen section (think deli-meets-sit-down-bistro inside a grocery store). Workshops with nutritionists and doctors are held regularly at various stores. Farm Boy even created its own private label brand, which includes about 500 food products.

“It’s a food experience,” York said. “At Farm Boy, we’re not in the price game, we’re in the value game.”

2. Tread carefully with trends

Although online ordering is a huge trend in the grocery industry, York points out that it’s still a tiny part of the overall market.

“Less than two per cent of all [grocery shopping] dollars are spent online. The percentages are going to go up a lot, maybe from two per cent to 12 per cent by 2023. But that means 88 per cent will still be done in stores in five years. Why would we invest a ton of money in [ecommerce] when 88 per cent will still be spent in stores?”

York is also skeptical of the retail trend to target marketing almost exclusively to millennials. He told Canadian Grocer magazine earlier this year, “millennials don’t have any money. Baby boomers control life.”

In short, Farm Boy doesn’t jump onto trend bandwagons unless there’s some evidence they’re actually relevant to its own stores and customers.

3. Stay fresh: Old-school meets digital technology

Lessons from a stubborn Farm Boy

But Farm Boy can’t completely ignore changes in the retail sector either. If it did that, it wouldn’t have grown from a single produce stand in 1981 into a chain of nearly 30 stores today.

While the company may not be an early adopter of emerging technologies, it does keep an open mind to them. Farm Boy has collaborated on a mobile app called Flashfood, is planning to overhaul its website and prefers to market on social media through popular influencers instead of mass-blasting its own tweets.

“Before we opened the new store in Toronto, we sent Farm Boy products to food bloggers and mommy bloggers [there] and said, ‘tell us what you think,’” York explained, “because when a corporation is telling you what to do on social media, nobody cares.”

And although York is wary of aiming too many marketing dollars at millennials, he revealed that Farm Boy has contracted consultants to find out “what [millennials] do and what they want.” As a result, his company is pursuing ways to “gamify” its marketing strategy for that demographic. Another insight gained from those consultants? According to York, many millennials prefer to buy healthy pre-made meals (like Farm Boy’s) rather than getting fast food or cooking for themselves.

Farm Boy also recognizes that it has to adjust its approach to each new large urban marketplace it enters. That may even mean some form of … ecommerce.

“We’re going to adapt when we’re in Toronto and Vancouver because they’re the only two [Canadian] markets where digital can make money,” York said. “In Toronto, we’re looking at click-and-collect and we’re looking at [grocery] delivery because it makes sense in that market.”

To recap, be unique. Don’t blindly do what everyone else is doing. Dig deeply enough to find out if new trends and technologies are a good fit for your business before rushing to invest too heavily in them. And be open to change, but only in ways that make sense for your company and your customers.

 

Up Next: Summer is here! Is your business prepared?

Christine Wong

Christine Wong is a journalist based in Toronto who has covered a wide range of startups and technology issues. A former staff writer with ITBusiness.ca, she has also worked as a reporter for the Canadian Economic Press and in broadcast roles at SliceTV and the CBC.

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