Your grocery dollars are being targeted more intensely than ever — but that’s actually a good thing.
The country’s big grocery chains have entered into a heated exchange with U.S. discount giants in recent months, and among them, Walmart in particular, which is aggressively opening up supermarket aisles and converting stores to food-carrying supercentres across Canada.
The result is a burgeoning price war among Walmart and Canadian grocers such as Loblaw Cos. Ltd. and Metro Inc.
You won’t hear the term price war from the companies, however. Instead, Walmart said Thursday it’s “investing in price for our customers,” while Loblaw a day earlier phrased its pinch on prices as “investing in margins,” referring to taking a hit on profit margins to get customers through the door.
Despite the efforts, sales look to be on the decline for supermarket owners as shoppers are faced with more options of places to pick up the odd grocery item or make their weekly shop.
Metro saw its sale decline by 1.8 percent this summer through to the end of September, while Loblaw eked out a very slight bump as it ramped up promotions in the period.
It’s a competitive environment for all grocers and discount retailers in Canada at the moment, with Walmart, the world’s biggest feeling the strain. Total sales from stores opened more than a year — in industry parlance termed ‘same-store sales’ — Walmart saw a decline in line with what Metro experienced.
Only the addition of 39 new stores that Walmart has converted from old Zellers locations over last year lifted total sales by 3.8 per cent.
Walmart, which operates 380 Canadian stores, 227 of which now sell groceries, is winning over more customers from the likes of Metro’s Food Basics banner and Loblaw’s No Frills. Newcomer Target is also applying pressure on the same shopper.
Meanwhile, Costco, another U.S. retail giant with a big presence in Canada, is quietly opening more than two dozen additional big box locations, pressuring the main banners owned by Metro, Loblaw and other conventional supermarket operators like Sobeys.
And the battle is just getting underway, analysts say.
“We are expecting a highly competitive food market,” Keith Howlett of Desjardins said Thursday.
“The hard discount format grocers are intensifying their efforts to contain the impact of Walmart and Target, and the conventional format grocers are intensifying their efforts to contain the impact of Costco,” the analyst said.