Competition Heats Up Among Quebec Food Retail Chains
Fierce competition among retail food chains for market share percentage points heats up as the start of the school year begins.
While the purchasing power of Quebec consumers remains stable, or even limited, discount supermarkets continue to increase their pressure on traditional ones.
For example, over the past five years, Walmart has launched a new grocery offering in Canada. In Quebec, it opened more than fifty new food hypermarkets within its large surface stores (now called Supercentres) offering fruit & vegetables, meat, bakery and a wide selection of grocery products.
Maxi, for its part, has adopted an aggressive policy of unbeatable prices, in which it matches discount prices of its main competitors.
Metro has, in recent years, converted several of its traditional Metro or Metro Plus supermarkets into a Super C discount banner. This was the case in Matane, Saint-Sauveur and many other places.
Costco is having a tremendous success with its 21 wholesale stores in Quebec and plans to add even more in the coming years.
The least equipped in this new low price environment is Sobey’s, which unlike other food retail chains, has no discount banner like Maxi and Super C and is mostly relying on service and quality.
Facing increased pressure, Sobey’s is fighting back. The IGA and IGA Extra banners announced last year an aggressive lower price policy but with higher operating costs, this path has clearly reached its limits, especially when the competition like Walmart decided to retaliate.
Taking again the initiative but on another front, Sobey’s launched this week “Win a Million Dollars”, “the biggest contest of its history”, to use its own terms.
For the whole fall season, every customer who buys a “Compliments” house brand product gets a chance to win a $ 25 gift card per week. At the end of the contest, a $ 500 card will be drawn per store and a grand prize of $ 1 million will be drawn live on TV.
It is therefore a clever formula that offers a balance between interesting and accessible prizes and a grand one that captures the imagination.
Interesting also to see that the contest promotes sales of the house brand, which offers the lowest prices and best margins at the same time for Sobey’s.
While this approach is effective in creating excitement within the channel and motivating customers, it is unlikely that it will succeed by itself in stemming the flow of consumers to discount supermarkets. Not to mention the costs that such a promotion entails.
The sheer size of this promotion betrays the urgency for Sobey’s to counterattack, while both Metro (2 X bonus points) and Provigo (Canadian Ticket Draw) offer promotions, of course, but nothing like that.
However, there is a ray of hope for the Maritimes chain and its stellar stores: the latest economic data have been the best for a long time and employment figures have never been so strong in Quebec. Perhaps more than anything else, this is what will truly help the brand to outperform its competition, more than all its expensive promotions and contests.
