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Where are Canada抯 newcomers spending their grocery money?Tuesday, November 07, 2017 > 09:25:28
New study from Solutions Research Group examines the power of the newcomer market
Loblaw Companies attracts more than 40% of all grocery spending by new Canadians, much of it through banners such as No Frills and Real Canadian Superstore, according to a new report from Toronto’s Solutions Research Group (SRG).
The study — based on interviews with 1,149 Canadians who arrived in Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal in the past 10 years — found Loblaw attracts an estimated 41% of all newcomer grocery dollars, with its discount banner No Frills and Real Canadian Superstore accounting for the “lion’s share” of that total.
Costco Canada is second with a 16% share of newcomer grocery spending, followed by Walmart and Metro at 12%, and Sobeys at 10%.
Thanks to its emphasis on fresh produce and seafood, Loblaw’s T&T banner –comprised of 22 stores in Ontario, B.C. and Alberta – helped push the company’s share among Chinese newcomers to 49%.
Rick Fernandes, vice-president of multicultural merchandising for Loblaw Companies, says the company works “very hard” to ensure that the food at its stores is aligned with the demographics of the neighbourhoods it serves.
“Our category teams source authentic items and brands from around the world, so when [customers] come to our stores they are able to find familiar brands that they cook with regularly,” says Fernandes.
The SRG study also notes that big-box retailers such as Walmart and Costco tend to perform better among newcomers than the general population. Costco’s 16% share of dollars among newcomers, for instance, is five points higher than its share among the general population.
By comparison, Sobeys’ 10% share of newcomers’ grocery dollars is lower than the 18% share it commands among the general population in the six markets included in the study.
Canada welcomed 300,000 immigrants in 2016 and 2017, and immigration minister Ahmed Hussen has stated he doesn’t expect that number to decrease in 2018. “If your marketing strategy isn’t already optimized to understand and respond to the needs of newcomers, you’re probably leaving some money on the table,” says SRG president Kaan Yigit.
Real Canadian Superstore and Costco lead the way in each of the three western markets, while No Frills and Walmart are the leading banners in Toronto. Costco and Food Basics are tops in Ottawa, with Maxi and Costco leading the way in Montreal.
Yigit ascribes the success of discount banners like No Frills to two key reasons: Newcomer households tend to be larger than the Canadian average (3.1 people versus 2.5 people), while their income levels are between 15-20% lower than the Canadian average. “The grocery dollar is a higher percentage of the household spend, so there’s a need to optimize,” says Yigit.