TORONTO — The oilpatch has been a boon for discount retailers, according to recent data, as financially strapped Albertans try to spend less on their grocery bills — but the bigger picture reveals that Canadians are always looking for a deal, regardless of their economic circumstances.
“We would say that those with a low income need low prices, and those with a high income love low prices,” said Carman Allison, vice-president of consumer insights at market research firm Nielsen Canada.
“We love to get a good deal, and we have a lot of savvy shoppers. Nowadays it’s smart to save, and we actually brag about how much money we are saving.”
Metro holds its own in grocery price wars, reporting higher profit and salesLoblaw Companies says its plan to build 50 new stores, renovate 150 more will create 20,000 jobs this yearOil downturn eats into grocery sales, slams Sobeys owner Empire with $1.36-billion loss
Thirty-five per cent of Albertans say they are less better off financially than they were a year ago, according to Nielsen’s April 2016 study, while 75 per cent were actively trying to spend less on their grocery bills.
As such, the market share of discount grocers such as No Frills grew seven per cent in the Prairies in 2015 to 31.4 per cent of the grocery market, stronger than in the rest of the country. The discount grocery channel in Canada grew four per cent in 2015, compared with zero market share growth at conventional full-line grocery stores.
Among Albertans, 64 per cent said they would switch stores in order to save money on food, and 87 per cent are engaging in what Allison refers to as “pantry loading” — stocking up on items such as tomato sauce and coffee when it goes on sale.
Dollar stores and warehouse clubs such as Costco also saw food sales soar in Canada last year, with each retail category growing their food sales by 10 per cent in 2015, compared with two per cent sales growth among traditional grocery retailers.
While Costco and Dollarama may have very different customer bases, an unquenchable thirst for savings is a constant among Canadians. What typically differentiates warehouse club food shoppers from dollar store food shoppers, Allison said, is average household income.
“I like to think of warehouse club shopping as discount shopping for the rich,” he said. “The average household income of a warehouse club shopper is $120,000, quite a bit higher than the Canadian average. You have to pay membership fees at warehouse clubs, and there are large cash register (totals).”
Consumers also tend to “forward-buy” at warehouse clubs, filling the pantry with oversized boxes of laundry detergent and bulk tinned goods.
“On a fixed income, people don’t typically shop like that, because they only have so much to spend. They have to make ends meet with that limited budget.”
But pantry-loading is also happening in the regular full-line grocery channel due to heightened promotional activity that has been escalating since 2010.
“People will buy more than they need because something is a good price,” Allison said. “When their coffee goes on sale, they don’t buy one, they buy five. They can spend $60 to $70 on coffee in one trip and not think twice about it.”
Today, 36 per cent of all grocery items are sold on a discount price promotion, a figure that has been on the rise since 2010, when the figure was 32 per cent. Prior to the recession, the figure was 27 per cent.
“It is good for the consumer, but it slows down retail growth” in the grocery sector, Allison said. “Consumers are spending less on a per-item basis than they have historically in the past.”