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Industry NewsWalmart Canada latest results impacted by grocery price war

Walmart Canada latest results impacted by grocery price war

Thursday, February 23, 2017

Wal-Mart Canada Corp. saw flat same-store sales during the quarter ended January 31, 2017, saying fierce competition among grocery retailers pushed prices lower.

Same-store sales for Walmart Canada during the fourth quarter, which includes the crucial holiday period, inched up just 0.2 per cent, the Globe and Mail reports.

The number of visitors to Canadian stores dropped 1.1 per cent while customer purchases amounted to 1.3 per cent more than a year earlier. Total sales at Walmart’s 400-plus stores in Canada rose 2.7 per cent as the retailer expanded its store base while its gross profit rate grew, although the company did not say by how much, the news report says.

“We continue to gain market share in traffic-driving categories like food and consumables and health and wellness,” Brett Biggs, chief financial officer of parent Wal-Mart, told a conference call, citing data from market researcher Nielsen.

The results reflect Walmart Canada’s push to step up its grocery and health and wellness offerings as it builds more supercentres with full supermarkets, putting more pressure on rivals while fighting off mighty and other low-cost e-commerce players.

To respond to shifting consumer shopping patterns, Walmart has been expanding its e-commerce offerings in both general merchandise and, more recently, food, developing a prototype store that focuses more than ever on its top categories and scales back on departments like furniture, cribs and strollers – directing shoppers to instead purchase those goods at its online site.

In underlining the changes, Walmart Canada CEO, Lee Tappenden, said he is considering refraining from adding new stores in 2017, which would be the first year the chain didn’t add more outlets since it arrived in Canada in 1994.

Keith Howlett, retail analyst at Desjardins Capital Markets, said Walmart Canada’s deceleration of existing-store sales growth was probably the result of food price deflation as well as “intense price competition in the grocery business in Western Canada,” the Globe reports.

Even so, Walmart Canada is winning away business from competitors, Nielsen data suggest. Citing Nielsen figures, the retailer said its Canadian market share in the key categories of food, consumer goods and health and wellness products gained 0.60 per cent in the 12 weeks ended January 28.

Wal-Mart U.S. outperformed the Canadian division, posting sales growth of 1.8 per cent at existing stores, driven by a 1.4 per cent increase in traffic to its outlets.

“We’ve now seen nine consecutive quarters of traffic growth in our stores,” Biggs said. “Clearly, we’re gaining traction.”

And in a sign that Walmart is tightening its inventory levels in general merchandise categories, its U.S. existing-store merchandise levels fell 7.2 per cent from a year earlier. Walmart Canada’s inventory “grew at a slower rate than sales,” the company said.

The retailer does not break out its actual Canadian sales, although they are estimated to be more than $25 billion.

Click here to read more about the grocery channel pricing battles

Click here to read about Walmart Canada’s test lab store

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