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10/12/2021

Costco the grocer of choice for Canadian newcomers: study

The big box giant is the ‘primary grocery relationship’ for 25% of newcomer households, followed by Walmart, Real Canadian Superstore, FreshCo and No Frills
Costco is tops with newcomers, according to an ongoing study by Toronto’s Solutions Research Group. (Shutterstock/ a katz)

Newcomers to Canada are likely to choose Costco as their grocery store of choice, with its prices, product quality—and of course its beloved sampling program—all playing a role in their decision.

The findings are part of the ongoing Newcomers to Canada study by Toronto’s Solutions Research Group. They are based on a survey of 850 new Canadians who arrived in Canada after 2015, as well as 600 interviews with respondents from the general population.

Newcomer respondents also identified Walmart, Real Canadian Superstore, FreshCo and No Frills as their preferred destination for groceries.

The study found that Costco is the “primary grocery relationship” for one-quarter of Canadian newcomer households, considerably higher than among the general population in Canada’s six largest markets. This is significant, says SRG, since newcomers tend to be big spenders when it comes to groceries.

“Despite watching their budgets and optimizing and value-seeking in terms of banner and product selection, and having household incomes about 13% less than the national average in their first five years in Canada, newcomers are spending slightly more (about 10%) than the average Canadian household,” says SRG president and research director Kaan Yigit.

Yigit says newcomer households tend to be larger than the Canadian average (3.1 people versus 2.5) and are more likely to be multi-generational. This means they are looking to optimize grocery spend, particularly during their early years in Canada where resources might be more strained.

Costco’s robust sampling program is also a key factor in attracting newcomers, providing an opportunity for people who may not be familiar with non-international Canadian brands to try a new product or flavour.

There are some geographic differences, however. While newcomers in the largest markets of Toronto, Montreal and Vancouver identified Costco as their preferred grocery destination, Real Canadian Superstore was cited in Calgary and Edmonton.

Yigit says grocers have an opportunity to get on newcomers’ consideration set by using loyalty programs. While newcomers are “generally underdeveloped” compared to the Canadian population when it comes to loyalty programs, their use of Costco membership and Walmart Rewards is slightly higher, he says.

“We think that in-store promotion of these programs offers greater visibility and an opportunity to explain the benefits,” he says. “Offering targeted in-language materials or staffing the promotion with multilingual staff communicates a warm welcome as part of the effort to recruit them.”

There is also an opportunity for grocers to develop their online business among newcomers, with half of all newcomer households purchasing groceries online in the past six months. Newcomers tend to be “mobile first,” says Yigit, with SRG’s research finding them to be “highly savvy” when it comes to their use of digital/social.

“Being fluid with mobile is really important to keeping in touch with loved ones back home, as well as to adapt to a new environment,” he says. “It was interesting to see that this translated into online grocery.”