Canadians are visiting discount stores more often as food price inflation strains grocery budgets. A September survey for the Agri-Food Analytics Lab at Dalhousie University in collaboration with Caddle interviewed 5,000 Canadians about changes they have made in their shopping habits within the last year. While it is interesting to find they are shopping the aisles of No Frills more often than Loblaws and Dollarama more often than Circle K, it may be more significant that they are shopping more frequently at all grocery formats as well as on-line.
LINK https://cdn.dal.ca/content/dam/dalhousie/pdf/sites/agri-food/Inflation%20PR%20EN.pdf
“Over 3 in 5 Canadians Concerned That Compromising on Nutrition Due to High Food prices Could Have Long-term Health Consequences,” Dr. Sylvain Charlebois, Director, Agri-Food Analytics lab, Dalhousie University
The change partly reflects the sharp drop in shopping frequency during COVID. People would visit one store, typically a supermarket, to buy all their weekly needs to minimize their time among potential virus carriers. The Bank of Canada Stringency Index which tracked the number, duration, and severity of lockdowns across Canada topped 40 in March 2020 and never dropped much below 40 until March 2022. The current wave of food inflation began three months later.
LINK https://www.bankofcanada.ca/?p=219486
Bank of Canada Stringency Index
It is useful to know how Canadians say they feel about food prices and nutrition, but opinion surveys tend to reveal what respondents think they should say. Revealed preferences tell us how they behave.
Pepsi-Cola Vice Chairman and Chief Financial officer Hugh F. Johnston was asked earlier in October by stock market analysts for his thoughts on the stress levels of American consumers.
He noted that consumers are being more selective in terms of the channels (e.g., discount stores) they shop and their increased orientation toward value but added, the number one sign of high stress in consumers is the avoidance of convenience stores and number two is reduced dining out. He noted that, PepsiCo’s revenues grew by 5 % and 8 % respectively in convenience stores and food service.
How about Canada? Canadians do seem to be avoiding convenience stores with sales ‘rising’ by 2 % compared to a 4 % for food and beverage stores overall for the rolling 12 months ended July 2023, in both cases, by less than the 9 % rate of food inflation. But Johnston is correct regarding consumer spending in food service which rose 18 % over the same period.
LINK https://www150.statcan.gc.ca/n1/en/type/data
CANSIM Table 20-10-0056-01 Retail Trade
CANSIM Table 21-10-0019-01 Food Services and Drinking Places
Of note, specialty food retail including delicatessens, butcher shops, bakeries, green grocers and other up-and-down-the-street food merchants have regained their 7 % share of over all food and beverage retail sales after underperforming in 2020 and 2021. Also, beer wine and liquor stores which experienced significant sales growth in 2020 have returned to 1% to 3% growth in the last 24 months.
Tomorrow, I’ll look at a breakdown of grocery budgets from 2010 to 2019
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