WINNIPEG — The price gap between traditional grocers and big box stores like Walmart and Costco is beginning to close according to industry analysts.
Canadian companies such as Safeway and Superstore are beginning to win over customers with lower prices and loyalty programs which could slow up the sudden rise in grocery sales from Walmart and Costco.
“They’ve cut their margins,” retail expert Rob Warren said. “They’ve cut their profitability, but they’ve also cut their costs.”
In the past decade, Walmart and Costco have gobbled up a growing share of Canadian food sales, offering some of the best prices in town. Warren said margins are too tight in the grocery industry, so it will be tough for one store to offer noticeably different prices than another.
“The grocery store margins are one percent or less,” Warren said. “You know they have to be having the same cost structure and charging the same prices.”
Global News went to three major grocery store in Winnipeg to find out for ourselves if the price gap is narrowing. Items like eggs were cheaper at both Superstore and Safeway compared to Walmart.
- Walmart: $2.93
- Superstore: $2.83
- Safeway: $2.79
When shopping for cereal, Global News chose to compare prices for Cheerios. The cheapest option was found at Safeway.
- Walmart: $4.47
- Superstore: $4.58
- Safeway: $3.99
For a one litre carton of milk, the difference was only pennies with Walmart ringing in slightly cheaper.
- Walmart: $1.50
- Superstore: $1.60
- Safeway: $1.58
In 2016, traditional grocers’ market share fell 79.2 per cent compared to 2004 while general merchandisers more than doubled. Industry analysts said it will be tough for big box stores to keep up with the high rise in grocery sales and things will soon slow from Costco and Walmart. Warren said in the future, consumers may not have to go store to store for the best deals.
“If you’re going to save ten dollars by running around to three stores, it’s not worth it because you’re going to eat that amount up in gas and time,” Warren said.
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