Competition, consumers hurt grocery store sales last year

Rising competition and penny-pinching consumers hit Canada’s traditional grocery industry hard last year, according to the just-released Canadian Grocer Market Survey.

Sales at chain and independent supermarkets and convenience stores rose just 1.1 per cent in 2012 over the previous year, to reach $86.2 billion.

Sales growth was dampened by several factors, including estimated double-digit growth by Walmart and Costco, and the continuing rise of ethnic supermarkets, especially in Canada’s key urban areas such as Toronto.

There were also some 120 fewer grocery and convenience stores in business countrywide at the end of 2012 compared to the end of 2011.

Consumers had an important effect on sales. As they have since the recession of 2008, they purchased on promotion and also headed to discount stores to stock up on groceries.

Last year, according to a Nielsen survey, the cost of food was ranked as the third most important concern of Canadians, after debt and the economy.

Canadian Grocer’s annual Market Survey is based on Statistics Canada data and provides the first real snapshot of the state of the industry in 2012.

Other highlights from the survey: Grocery sales grew in all provinces except for Quebec last year; Alberta became the country’s third largest grocery market in 2012, beating out British Columbia. The last two years have been the worst growth years for the grocery industry since the mid 1990s. Sales in 2011 grew just one per cent.

The full Market Survey is published in the February issue of Canadian Grocer, out now. To order copies contact Canadian Grocer’s group sales manager, circulation, Michelle Iliescu at [email protected] for more information on their services.