Grocery sales on rise at Walmart Canada — but traffic is falling

A concerted push by the world’s largest retailer to snare a bigger chunk of Canadians’ weekly grocery budgets this year continues to pay off for Walmart, it says.

The U.S. discount giant said Thursday its Canadian stores won more business away from domestic grocery retailers during the twelve week period up to Oct. 18, eking out a 0.2 per cent gain in market share against the likes of Safeway, Metro, Sobeys and Loblaw.

The gain was led by rising fresh food sales at Walmart as it continued to invest heavily in attracting grocery shoppers. But while the efforts are yielding results, they’ve yet to arrest one troubling trend for the retail behemoth — declining traffic to Canadian stores.

Fresh food push

“Fresh” category items, such as produce, “performed particularly well” in the latest three-month stretch, said David Cheesewright, the head of Walmart’s international unit, which includes Canada.

Cheesewright said Canadian fresh food sales experienced “double-digit growth” in the three months up to late October, a feat given the “increasingly competitive environment.”

Experts say the sale of fruit, vegetables and other fresh items is a key driver of overall grocery and merchandise purchasing among shoppers.

“A compelling fresh food offer encourages consumers to shop the store more frequently, facilitating a halo effect for other categories,” Kenric Tyghe, an analyst at financial services firm Raymond James, said in a recent industry note.

Gaining ground

Walmart’s slice of the $108 billion Canadians spent on groceries last year was estimated at just over 6 per cent, versus 27 per cent at Loblaw (and its banners) and 20 per cent at Empire, which owns Safeway and Sobeys, among other banners.

Walmart said it has improved that number by multiple percentage points through 2014. Some experts suggest Walmart now accounts for 10 per cent of Canadian grocery sales and could grow that share to upwards of 14 per cent through next year.

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In many respects Walmart is buying growth though, recently expanding dozens of additional department stores into “Supercentres” that support food aisles.

It has spent half a billion dollars this year rolling out food sales to a majority of its 390 or so Canadian stores.

Cheesewright’s boss, Walmart CEO Doug McMillon, said the cash outlay was working. “The investments we’ve made to remodel our stores and drive supercentre expansion are resonating with customers,” McMillon said.

Traffic down

Still, Walmart is suffering from problems affecting many Canadian retailers this year – lower foot traffic into stores. While the basket size, or value of goods being purchased per visit, is up, Walmart saw 1.4 per cent fewer customers in the third quarter than in the same three-month period last year.

Analysts at Desjardins Securities said they believe general merchandise sales have been falling this year.

Grocery sales were what allowed the discount giant to squeeze out a slight 0.6 per cent in overall sales at stores open more than a year.