Gro­cers see slow­ing mar­ket share loss to Costco, Wal­mart

Cape Breton Post - - Business -

While in­ter­na­tional re­tail­ers Costco and Wal­mart have gob­bled up a grow­ing share of Cana­dian food sales for more than a decade, fur­ther gains are ex­pected to be tougher to eke out as the coun­try’s tra­di­tional gro­cers mount an im­proved de­fence. In­dus­try watch­ers say the price gap be­tween the two sides has nar­rowed and the tra­di­tional stores’ loy­alty pro­grams are help­ing sup­port sales.

“Ev­ery point of mar­ket share is hard fought over in the gro­cery mar­ket,” said Ken­ric S. Tyghe, a con­sumer and re­tail an­a­lyst at Ray­mond James. “The tra­di­tional gro­cers have done a better job de­fend­ing share than, I think, a lot of ob­servers ex­pected.”

While they have op­er­ated in Canada for years, com­pe­ti­tion from Costco and Wal­mart is still top of mind for lo­cal gro­cers given the low-cost strat­egy of the two for­eign gi­ants.

In his most re­cent quar­terly call with an­a­lysts in April, Metro CEO Eric R. La Fleche dis­cussed Costco’s ex­pan­sion in On­tario, say­ing it is “a sig­nif­i­cant com­peti­tor, and we have to ex­e­cute and dif­fer­en­ti­ate.”

In the sec­ond quar­ter of 2004, tra­di­tional gro­cery stores sold about $12.3 bil­lion worth of food, ac­count­ing for about 90 per cent of the mar­ket, ac­cord­ing to Sta­tis­tics Canada data. Gen­eral mer­chan­dis­ers, which in­clude Costco and Wal­mart, sold about $1.3 bil­lion or roughly 9.8 per cent.

In the same quar­ter of 2016, tra­di­tional gro­cers’ mar­ket share fell to about 79.2 per cent, while that of the gen­eral mer­chan­dis­ers more than dou­bled.

Those changes trans­late “into bil­lions and bil­lions of dol­lars ev­ery quar­ter,” said Kevin Grier, an agriculture and food mar­ket an­a­lyst, adding that the shift in mar­ket share to the U.S. chains is ex­pected to slow.

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