Canadians spending more at warehouse club stores

Data from Nielsen finds that consumers are purchasing more CPG products in large formats to help curtail costs.
Retail

Warehouse club stores have gained momentum in Canada.

New research by Nielsen shows Canadians spent $13.5 billion in warehouse club stores last year, representing more than 12% of all sales in CPG.

According to the market research firm, wholesale stores – such as Costco and Loblaw’s Wholesale Club banner – have increased their market share thanks to growth in the overall number of shopping trips and average household spend. Through 2018, the number of shopping trips increased to 110 million, up 12% since 2015, with an average household spend of $1,565 for the year (an uptick of 5%).

Individual shopping trips have also risen, reaching $122 per trip. Nielsen notes that the number is “substantially higher” than the reported $57 average basket size across all CPG retailers.

The company says that growth can be attributed to Canadian saving strategies. As 70% of consumers report trying to limit their spending on CPG goods, warehouse club stores offer larger quantities at a reduced cost per use. Around 50% of respondents to a recent survey said they were looking at purchasing products in larger formats as a measure for saving money.

It remains only one of several strategies Canadians are using to reduce costs, however. Consumers also report trying to stock up on products (81%), to buy them on sale (67%) and to switch stores (55%), among other tactics.

There are also regional differences across the country. Warehouse club stores are most developed in the two most Western provinces. British Columbia leads the sector in performance, with its warehouse stores accounting for 15.1% of CPG sales, followed by Alberta, at 14.8%. Meanwhile, Ontario, which lags behind at 11.7% of CPG sales, has seen the largest increase in share, at 1.6% over the last four years.

Last year was a particularly difficult one for overall retail, with sales growing by only 2% over the year before, according to an analysis of Statistics Canada data. Store merchandise sales grew by only 1.3% year-over-year, compared to 3.2% growth the year before.

Tags: