Many of us are eating up the financial gains lower pump prices are providing, industry experts said this week, as consumers increase the amount of food being bought at supermarkets.
“Gas prices are putting some more change in our customers’ pocket,” Eric La Flèche, chief executive of Metro Inc. said on a conference call Tuesday. “The biggest impact we’ve seen is increased transactions, increased traffic in our stores.”
Indeed, sales at the country’s third-largest grocery store chain jumped 5.2 per cent in the three months up to mid-December, Metro said. Importantly, sales at stores opened more than a year – a key metric that shows the ongoing pace of purchases – jumped 3.8 per cent, the best showing in years, analysts said.
Loblaw, the country’s biggest grocery store chain, is set to report sales results on Feb. 26 and experts suggest the grocer is likely to see similar gains.
“There is a huge gas price windfall to spend,” retail stock analysts at Canadian Imperial Bank of Commerce said in a research note on Wednesday.
MORE: A new normal at the supermarket — fewer deals, higher prices
By CIBC’s estimates, if gas prices average $1.05 a litre this year, consumers will have about $10 billion in additional spending cash. If pump prices average $0.95 cents, consumers will divvy up $14 billion to divert elsewhere.
The national average gas price was 92.5 cents/litre as of this week, according to Natural Resources Canada.
If just a fifth of that sum ends up spent on additional food — and Metro’s recent experience suggests a sizable chunk of gas money is headed to supermarkets instead — that will juice same-store sales by 2 per cent.
Consumers aren’t feeling confident enough yet to splash out on more expensive treats or food items, Metro’s La Flèche suggested though.
“Customers remain very price sensitive, shopping a lot on promotion. We’re not seeing trade-ups because they feel they have that much more money. But they’re in our stores, we’ve seen more traffic and we’ve seen the average basket size go up.”
jamie.sturgeon@globalnews.ca
Follow @jasturgeon
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