WATCH: Comparison shopping Target, Loblaws & Walmart to see who gives you more bang for your buck. Minna Rhee fills the shopping cart.
Fresh retail sales numbers released Tuesday showed Canadian consumers dialing back on spending for the first time in seven months.
Where the penny pinching is concentrated is noteworthy – on general merchandise, clothing and groceries.
Volumes for those products haven’t changed but rather prices look to be falling, experts say.
That’s an indicator that the likes of Walmart, Target, Loblaw and other big retail chains may be getting more aggressive in an evolving price war, something sure to benefit consumers whose dollars will be stretched further.
“We’re not seeing a lot of price pressure there, so that could be a function of increasing competition,” Nick Exarhos, economist at CIBC said.
MORE: Walmart slashes prices to win more Canadians’ grocery business
July numbers released on Tuesday showed general merchandise sold at department stores fell 2.7 per cent compared to June, while clothing and shoe sales declined by similar amounts month-over-month. Supermarkets recorded a 1.1 per cent pullback.
The fall appears to correspond with more aggressive price moves among sector heavyweights Walmart and Target Canada, especially, both of whom are locked in what appears to be a burgeoning price war that’s rippled out to affect others, such as grocery chains.
Last month, Walmart said it is growing its share of Canadian grocery sales as it continues to make “price investments,” or cutting prices in order to achieve that.
MORE: Walmart making bigger push into grocery aisle this year
Grocers such as Loblaw have been forced to respond.
In late July, Loblaw, the country’s biggest grocer, said prices have been reduced on dry good items like cereal, crackers and cookies (though fresh foods like meat and produce are rising sharply). “There’s still deflation in the dry groceries side of the store,” noted Galen Weston, president and executive chairman of Loblaw, on a July 24 conference call.
“Lower food prices partly explains the decline in food store sales,” David Madani, an economist at Capital Economics said Tuesday after the release of the July numbers.
it’s a battle that’s only intensified as Walmart has rolled out more supercentres across the country.
And new data released on Monday suggests Target — which has opened about 130 stores in Canada to date — has recently dropped prices on grocery and beauty categories below what Walmart is charging for the same products.
A report from Kantar Retail, a market researcher, said prices have fallen on a basket of 33 grocery, health and beauty products by 3.9 per cent at Target versus the same basket at Walmart.
MORE: Target Canada’s new prices undercut Walmart, data suggests
Still, one month a trend doesn’t necessarily make, experts said on Tuesday. Sales on general merchandise, clothing and groceries will have to show continued pressure in August and into the fall before experts are ready to declare a price war underway.
“We’ll have to see that over a longer period of time,” CIBC’s Exharos said.
Target’s pricing push comes ahead of key holiday season for its 130-plus Canadian stores, with experts saying some could be shut down if sales don’t improve.
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