Even as the federal government courts foreign grocery chains in an attempt to lure more competition to Canada, there’s mounting evidence Canadian consumers have already massively shifted their grocery shopping away from Canada’s supermarket oligopoly.
And the big winners include foreign giants such as Walmart WMT-N and Costco.
While Statistics Canada reported a drop in retail sales this week, one big exception was the general merchandise category. Compared to last year, general merchandisers saw inflation-adjusted sales climb 12 per cent, while food and beverage stores suffered a real sales decline of 0.9 per cent.
Those numbers don’t break out what items shoppers were buying. But retail commodity data released earlier this month by Statscan does, and it shows that food sales at general merchandisers are vastly outpacing those at traditional grocery stores. As of the fourth quarter of 2023, real food purchases at general merchandisers grew nearly 16 per cent from the year before, nearly eight times faster than the pace at food and beverage stores.
In fact, for every dollar Canadians spent on food at grocery stores in the fourth quarter of 2023, they spent 42 cents on food at a general merchandiser. In 2019 it was just 26 cents.
In the general merchandise space, food sales are dominated by Walmart and Costco Wholesale Corp COST-Q., the two largest food retailers after the big-three domestic grocery chains Loblaw Cos. Ltd. L-T, Sobeys Inc. EMP-A-T and Metro MRU-T, with roughly 17 per cent of the market between them in 2022, according to Canadian Grocer magazine. Other domestic general merchandisers, such as discounters Dollarama Inc. and Giant Tiger, have also ramped up their food offerings.
The competition is clearly helping. Food inflation cooled again in March, with the annual price increase for food purchased from stores slowing to 1.9 per cent in March, from 2.4 per cent in February.
Decoder is a weekly feature that unpacks an important economic chart.
Jason Kirby