Shoppers return to discount after ‘short pandemic hiatus’: Loblaw president

Canadian grocery shoppers are making a return to discount following a "short pandemic hiatus," allowing Loblaw Companies Limited to regain some of the market share it had lost in the early days of COVID-19, its president said during a conference call with analysts on Thursday.

At the start of the pandemic, Loblaw saw a "flight to conventional" as shoppers favoured one-stop shopping, but the grocery company is seeing a change in consumer patterns that started in its fourth quarter and is continuing into 2021, said Sarah Davis.

"We're seeing more shoppers doing more than one shop a week, perhaps shopping at a few different banners as well," said Davis, pointing out that its discount banners account for approximately 60% of Loblaw's supermarket business and 40% is conventional.

Given that ratio, Davis said Loblaw made sure it had a competitive price position at its discount banners to help regain some of the market share it lost during the height of the pandemic, and its fourth quarter results showed improved trajectory and a narrowing of the gap.

"It is important to note that our food divisional results were more balanced in Q4 than they have been since the beginning of the pandemic, this suggests discount customers are returning to discount stores following a short pandemic hiatus," said Davis.

In Q4, Loblaw said its food retail same-store sales grew 8.6%, with its conventional division growing 10.6% and its discount division growing 7.4%. That's up from the discount division's growth of 4.7% in the previous quarter.

In Loblaw's drug division, Davis said the company continued to see "unusual sales results tied to pandemic conditions" including a lighter than usual flu season and a decline in in-store beauty sales. These are not long-term concerns, however.

Shoppers Drug Mart is seeing strong results in convenience and food, said Davis, and is expanding its role as a health and wellness destination. Davis said its pharmacies are ready to play a key role in Canada’s vaccine rollout effort. “Our 1,300 pharmacies are within 10 minutes of most Canadians … and we can administer one million shots per week.”