Canadian grocers see sudden shift to frugality

Wed Mar 4, 2009 5:09pm EST
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By Scott Anderson and Natalie Armstrong

TORONTO (Reuters) - Canadians are shifting away from premium products when they visit the supermarket as the recession bites deeper and consumer confidence weakens, grocery chain executives said on Wednesday.

Executives at Loblaw Companies, the country's No. 1 supermarket chain, and Empire Co Ltd, owner of Sobeys, the No. 2 chain, said the change in buying habits has been quick and profound and is not likely to be short-lived.

"There is a flight to value and the flight to value is long haul and not short haul. This is not going to be a temporary thing that happens for two or three months," Allan Leighton, president and deputy chairman at Loblaw, told a retail conference held by CIBC World Markets in Toronto.

Leighton said shoppers have "all of a sudden become very value conscious".

Also at the conference, Bill McEwan, chief executive of Sobeys, said the impact of the economic downturn on consumer confidence has been "profound".

"It's measurable differences in the way consumers are behaving, whether it's transaction count or transaction size, the categories that are growing, the categories that are declining," McEwan said.

"We're seeing categories that were relatively flat or stable before, grow at more than double digits, sometimes 15 to 20 percent growth when other things are in 5 percent decline.

"Tea and coffee is an example, pasta and soups. Things that were staples in modest growth or in some cases decline, are now no longer flat or stable items, they're important items to offset the real movement, which is a lot of people eating less out of home and preparing more for themselves."   Continued...