Discount grocers to outperform conventional stores amid surging inflation: Report

A man pushes a shopping cart towards a closed grocery store in Montreal, Sunday, Jan. 9, 2022. A new report says discount grocery stores are set to outperform conventional supermarkets in 2023. | THE CANADIAN PRESS/Graham Hughes

TORONTO — A new report says discount grocery stores are set to outperform conventional supermarkets in 2023.

The DBRS Morningstar commentary says surging inflation and interest rates are shaping consumer behaviour and increasing sales volumes at lower-cost grocery stores. 

It says consumer efforts to curtail spending will encourage more home cooking, which benefits the grocery industry in general as people forgo restaurant dining to cut costs. 

The report says discount grocers are expected to see the biggest increase in food retail volumes as shoppers seek promotional discounts, lower-cost brands and more affordable options. 

The expected growth in the discount format is the opposite of what occurred during the pandemic, when health and safety concerns, the desire for convenient "one-stop shops" and online grocery orders drove sales at conventional supermarkets. 

The report says the sales trends between discount and conventional stores are expected to gradually return to historic levels as economic conditions stabilize, but that discount grocery could see some "structural benefit" if they can hold on to new customers.

This report by The Canadian Press was first published Jan 23., 2023.

The Canadian Press