‘Loyalty is under fire:’ New study shows shoppers are putting price first
Loyalty is being tested as consumers prioritize price above all else, according to a new study by Dalhousie University and Caddle.
In fact, nine in 10 Canadians actively look for discounts when grocery shopping, while 75% make purchase decisions solely based on price. Almost half (47%) now favour private label brands over national brands for the better value they provide.
The survey of 3,000 Canadians was conducted in February, amid the ongoing—and flip-flopping—U.S. tariff threat.
“We’re definitely seeing consumers in flux right now. None of us really know what’s going on; it seems like every hour, something new is coming out of the news that’s impacting all of us,” said Jared Kligerman, VP of brand partnerships at Caddle, during a recent webinar presenting the findings. “[Businesses] are having to pivot very quickly to these changes. And for consumers, [the grocery store] is where we’re going to feel the impacts of tariffs first and foremost.”
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While consumers are hyper-focused on price, they’re not quite willing to forgo quality. In fact, 36% said price and 27% said quality are the biggest influences of their perception of value.
Additionally, when asked what’s most important when they think of value while shopping for groceries, 64% said best quality for the price. That was followed by discounts and promotions (50%), lowest price (41%) and better taste or freshness (33%).
“It’s not just all about the price; quality is still playing a major role in this,” said Kligerman.
The survey also highlights the rise of discount banners. Consumers said they find the best value when shopping for groceries at discount retailers (35%), followed by traditional grocery stores (21%), Costco (18%) and Walmart (12%).
“The transformation of the grocery world in Canada has been incredible. In the last 12 months alone, we’ve seen many conversions to discount stores,” said Sylvain Charlebois, senior director at Agri-Food Analytics Lab at Dalhousie University. Loblaw, for example, piloted an ultra-discount No Name store last summer, with smaller footprints, no refrigerated products and a focus on private label.
“There’s a bit of a new era happening, and I don't think it’s going to disappear,” added Charlebois. As consumers recognize they can save a lot of money in discount stores, Charlebois believes grocers “will remain quite aggressive” in promoting them.
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The survey further dove into how economic strains are redefining shopping habits. Nearly one quarter of respondents (24%) have changed where they shop for groceries in the last year due to economic pressures. Canadians said they now shop at different stores to take advantage of discounts and deals (36%), shop at discount stores more often (35%) and buy more groceries from Costco (23%). More than half (54%) prefer buying in bulk to save money, even if it means higher upfront costs. However, Klingerman noted that figure is down from 65% last year, which he said is reflective of tightening budgets amid economic uncertainty.
In this environment, how do you get people to try new products or brands? The top motivators to try a new brand or product is promotion or discount (51%), better quality (33%) and Made in Canada (33%).
“Loyalty is under fire, with 80% of consumers willing to switch for a better deal. That is steep,” said Klingerman. “So, obviously promotions or discounts are going to be leading the pack in terms of how you influence that.”
The survey highlights how local sourcing and made-in-Canada products are gaining traction, as a wave of patriotism moves through the country. Seventy-five percent of respondents said that buying Canadian-grown or produced food has become significantly more important in the past few months.
Charlebois said there’s an opportunity to “de-Americanize the grocery store” by sourcing from new suppliers.
While he expects the made-in-Canada movement to continue, Charlebois noted that shoppers are increasingly looking for local products—and that’s where it gets complicated.
“Is local provincial? Is local national? Is local from a specific region in Ontario or elsewhere? And so, I think there is a movement towards local, but depending on where you are in the country, it may mean something different… I think the approach will become more granular as we see more people engage in this ‘buy Canadian’ phenomenon.”
