There has been a lot of talk about the Dollarama food offering since a viral publication showed us, with supporting photos, that Italpasta spaghetti was sold there four times cheaper than at the supermarket. This comparison exercise provoked increased curiosity about the food sold in this chain of stores and its business model.
Meanwhile, its competitor Giant Tiger wasn’t really generating any attention or interest on the internet. The discreet private company remained under the radar.
In its 265 stores, however, it’s a different story. There are more and more bargain hunters there, and not just for its affordable pajamas or bedding. In Quebec, its food sales are jumping significantly, I learned, in all categories.
It must be said that the retailer established in Ottawa places a lot of emphasis, in its circular, on its food offering. This week’s starts with four full pages of vegetables, meats and frozen products. When we know that 60% of Canadians read “completely” the circulars of “several stores”, according to the consumer expert firm NIQ (formerly NielsenIQ), Giant Tiger’s strategy is right on target to attract concerned households. by the price of the grocery basket.
Giant Tiger is not a grocer, but it is seeking to take advantage of a major trend in the food industry: the increased popularity of private label products.
These brands have a reputation for offering better value for money. Moreover, their market share has been growing steadily since food inflation made headlines. Now, one in five products sold in grocery stores displays a private label.
It is in this context that a new range of “high quality” products called Marché (in French and English) has just been launched. Giant Tiger promises customers “an incomparable culinary experience at affordable prices” and “a whole new world of flavors.” Nothing less !
The 60 or so products posted online include pecan pralines, brandy-filled chocolates, Swedish meatballs and square butter and raisin tartlets. In store, there are 80, and around 40 will be added in January, specifies the company.
The Marché brand is reminiscent of Walmart’s called Notre Excellence (Our Finestin English) which offers a more refined selection than its Great Value brand.
This addition to the Giant Tiger offering is certainly not revolutionary, but it demonstrates that the company, known for its affordable clothing, is seeking to increase the appeal of its food offering.
This is wise in this period when purchasing habits are disrupted by inflation, where consumers no longer hesitate to turn their backs on supermarkets for certain products if it allows them to save money.
As I wrote at the beginning of the year, among all the store chains that sell food, Dollarama is the one whose market share has jumped the most in 2022. Food sales there have increased by a whopping 19% from the previous year, according to NIQ1.
By attracting consumers with bags of five avocados for $3.88, Giant Tiger obviously hopes to sell them other products with a significantly higher profit margin, such as clothing. Pharmacies and Walmart use the same strategy.
Giant Tiger also imitates Maxi by matching the price of its competitors, something Walmart has stopped doing. And like major supermarket chains, it offers additional and exclusive discounts to members of its VIP TG loyalty program. This week, for example, they pay $1.47 for onions (2 lbs) rather than $2.47.
This marketing strategy, which Maxi, Metro and IGA are using more and more, is far from unanimous. Some people who do not want to provide their personal data to retailers or who are not comfortable with technology denounce the fact that their basket costs them more as a result. We can also see the situation in reverse. Those who agree to create an online account and pass on their valuable data to merchants obtain discounts in exchange.
Discounts granted for the purchase of several similar items raise the same type of controversy. Consumers see this as discrimination against single people who do not buy two loaves of bread at once. Some even believe it should be illegal. But doesn’t it make sense that a company’s best customers should be rewarded with volume discounts? Either way, supermarkets seem to have heard the criticism, as multi-buy discounts are rare these days.
We are also still awaiting the announcement of a first new initiative from a major grocer to stabilize food prices, as requested by Ottawa last month. In the meantime, businesses that had not been summoned to Parliament Hill to discuss inflation, such as Giant Tiger and Dollarama, continue to win the favor of consumers.