Canadian Retailer - Spring 2015 - 30
What surprises or worries you about the status of the
Brain: Consolidation should lead to stronger pricing. That
hasn't happened. The price wars continue. The Canadian
market has been no growth/low growth for a while. In
that environment, there's a reflex to drop prices to unsustainable levels to capture share.
Hillier: There is over-discounting, and so an opportunity
to have smarter promotions.
What's the right formula for
Allison: We saw regular prices go up
about 4 per cent. Promoted prices actually went down 1 per cent. So we have a
5 per cent price divergence. That tells us
pricing is getting deeper on discounts.
Ideally, you'd like to see an alignment.
"There is no more datacentric industry than
grocery. It's hard work
to use that information.
The ones that do it well
will be at the forefront to
personalize the ritual."
- DEAN HILLIER,
AT Kearney Ltd.
What's striking about some of
Hillier: A lot of deals are still led
by the vendor not the retailer.
Grocers are focused on the
Brain: The real opportunity is for both sides to work well
together, leveraging their resources and information to
the analysts can prophesize
about the trends, driven by both
the consumer and manufacturer,
and the impacts that they might
have on canadian grocers and
their bottom lines. However, there
is a lot of innovation happening
in the aisles of canadian grocery
stores that impact the way the
canadian retailer | SprinG 2015
Is the grocery sector particularly vulnerable to over-discounting? What's the
consumer attitude to spending, in general and towards groceries?
Brain: Grocery consumers tend to be
more loyal once they're in the rhythm of
shopping at a particular retailer. When
stickiness is greater, you tend to see more
dysfunctional behaviour in terms of the
level of discounting. If I know I can
capture you for X number of years, I'll
do whatever I can to get you.
Allison: But average shopping trips
are down with the exception of warehouse clubs.
Consumers shop around more for
groceries than ever-average loyalty to
a store is 14 per cent. The consumer is
fragile. When we ask if you're trying to
spend less, 50 per cent say yes. That's
on overall household. For the grocery
spend, it's 70 per cent. Consumers
are pulling out the Swiss army
knife of savings-buying on promotion, coupons, buying in bulk.
What are the dangers of offering
continual deep discounts?
Allison: That can give you a
lift. But if you promote more
and more, consumer response
actually goes down. Consumers aren't motivated to buy now
because the item will probably
be discounted next week or
after. You're training them to
expect discounts. The more you
discount, the more you have to
sell to make up for lost revenue. You may
win the week. But it's not a sustainable
not long ago, ethnic offering at the grocery store was reflected in a pre-packaged taco kit. today, consumers can
find cuisine from all over the world in their local grocery
stores. Statistics canada forecasts that by the year 2031
visible minorities will make up 31 per cent of the country's
population. it's also predicted that 70 per cent of consumer spending growth will come from visible minorities over the next decade.
canadian grocers have noticed this trend and are broadening their
offerings as a result.