Walmart expands one-hour deliveries in GTA, but Canadians still hesitant to online groceries

Walmart Canada is expanding its partnership with a third party delivery app in the Greater Toronto Area, as the retailer continues to invest in new ways to bring groceries to its customers. (AP Photo/Swayne B. Hall, File)

Canadians may be hesitant when it comes to buying groceries online, but that hasn’t stopped Walmart Canada from expanding its list of options for its online shoppers.

Walmart Canada announced Thursday that it is expanding its partnership with a third party delivery app in the Greater Toronto Area, as the retailer continues to invest in new ways to bring groceries to its customers.

Walmart has spent the last three months testing out a pilot project with Cornershop, a grocery delivery app that allows customers to purchase groceries from select locations in the GTA and have them delivered in as quickly as one hour for a fee. Daryl Porter, Walmart Canada’s vice president of e-commerce operations and logistics, said the app’s popularity and positive customer feedback prompted the retailer to expand the partnership to nine more stores in the GTA for a total of 14.

The expansion comes at a time when Canadians are still resistant to online grocery shopping. According to PwC’s Canadian Consumer Insights Survey released earlier this year, just 20 per cent of respondents said they would be “likely” to purchase groceries online within the next year. At the same time, 69 per cent of Canadians said they were “unsure or not likely” to do so.

Sylvain Charlebois, a Dalhousie University professor specializing in food distribution and policy, says online shopping in food retail represents just 1.8 per cent of the $120 billion market.

Still, Porter said Walmart wants to make its Cornershop partnership “more robust” and give customers an array of options in how they grocery shop.

“We’re firmly positioned around the Walmart customer that comes directly to us...but in the on-demand space, players like Cornershop allow us to offer a different choice,” Porter said in an interview with Yahoo Finance Canada, adding that the company does not have immediate plans to expand outside of the Toronto area.

“We’ll see how it goes in the next set of stores and then make a decision,” he said.

Cornershop, which first launched in Mexico and Chile in 2015, said the expansion will allow the company to hire additional employees in Canada and improve its service.

“There is always a lot to improve and some of those improvements – such as speed – come hand-in-hand with increased volume, so we expect the customer experience will keep improving,” Cornershop’s chief executive Oskar Hjertonsson said in an emailed statement.

While Hjertonsson would not disclose how much of Cornershop’s Canadian business Walmart represents, he said it is “very significant for us and our customers.” He also said the company plans to expand its services to several new cities in Canada next year.

Walmart tried to purchase Cornershop for US$225 million earlier this summer, but the deal was blocked by the Mexican government. According to a Reuters report, Mexican officials opposed the acquisition because Walmart could not guarantee a level playing field for rival retailers, whose customers use the app to order groceries and other goods. In Canada, the Cornershop service is used by a range of retailers in addition to Walmart, including Costco, Metro, Longos and Canadian Tire.

Walmart Canada has expanded its offering of online grocery options over the last several month. The company recently launched its online grocery delivery service in Montreal, Que., making the service available in every province across the country.

Signup for the Yahoo Finance Canada newsletter.

Download the Yahoo Finance app, available for Apple and Android.