Why are fewer Canadians shopping at Walmart?
Why are fewer Canadians shopping at Walmart? This is an unexpected question, given that Walmart Canada’s sales performance has been gaining momentum.
The retailer reported comparable store sales growth for the last nine consecutive quarters, supported by tailwinds from Target’s exit and rising food inflation in 2015. Corporate leadership is happy with the performance, highlighting Walmart Canada as a market with “strong” and “profitable” results at its annual investor’s meeting earlier in October.
In examining its performance, Walmart Canada’s traction is somewhat nuanced. Basket size is up. The retailer reported growth in average ticket each quarter since 2010. Customer traffic growth has been less consistent. It declined for ten consecutive quarters before showing improvement in the past seven.
Looking at what impacts customer traffic, there are two dimensions: shopper trip frequency and the total number of shoppers. Examining Kantar Retail’s Canadian ShopperSpective data reveals that Walmart’s trip frequency is up recently, whereas its total number of shoppers has eroded. Comparing 2014 versus 2016, Walmart Supercentre and discount store shopper reach eroded from 73% to 66% of primary household grocery and consumables shoppers.
What’s fascinating is that this finding is not unique to Walmart. It is a shift across the landscape. Looking at the top ten consumables destinations in Canada, only Costco and Loblaw’s discounter banners defied this trend. Even Dollarama witnessed shrinking shopper reach during this time, with trip frequency among its base rising to support its growing customer traffic.
This retailer reduction among shoppers has several implications.
It means that many retailers are becoming more dependent on their core audience. Stores will feel greater pressure to build deeper, more individual connections to support lifetime loyalty and drive greater share to wallet. This reinforces the importance of using loyalty card data and shopper insights to drive more personally relevant messages. It likewise elevates the significance of deepening personal connections with store staff, such as the butchers, wellness advisors, and pharmacists.
This shift also will reinforce the race to offer more flexible shopping options, such as online ordering and click-and-collect, to serve a wider range of trips. With retailers from Dollarama to Metro investing to expand their online reach, this competition for shopper loyalty is only starting to heat up.
For information about our Canadian ShopperSpective insights, contact me at: Robin.Sherk@KantarRetail.com