Costco‘s reputation for value has long drawn crowds, but a new report indicates the warehouse giant is losing ground in Quebec to a surprising competitor.According to data from Dunnhumby, Maxi has overtaken Costco as the preferred grocery retailer in the province, a shift attributed to a greater emphasis on price adn promotional strategies among Quebec consumers[[[[[1]]]. The findings, released December 16th, reflect changing economic pressures and a growing demand for savings within the Quebec market.
Costco is a consumer favorite, and for good reason – especially considering the weekend crowds vying for position at the meat counter. However, rising food prices are beginning to erode the warehouse retailer’s popularity in Quebec, according to new data.
Publié à
Across Canada, Costco consistently ranks as the top grocery retailer in assessments by Dunnhumby, a British firm specializing in consumer behavior. However, in Quebec, the company has been surpassed by Maxi.
This shift is attributed to “superior performance in pricing, promotional strategies, and overall savings,” according to the Dunnhumby report. Consumers in Quebec now place a greater emphasis on value for their money than their counterparts elsewhere in the country, a change in consumer priorities driven by economic pressures.
The perception that shoppers get more for their money at supermarkets promoted by Martin Matte is proving to be a key differentiator. Last year, consumers in Ontario prioritized “value” slightly less than those in Quebec.
Alongside its sister brand, No Frills, Maxi is proving to be a “formidable duo” in other provinces, Dunnhumby found. Both chains offer competitive base prices and effectively combine strategies, including a well-regarded private label brand, personalized offers for PC Optimum members, and effective marketing campaigns.
The PC Optimum program’s success is evident in its 17 million members nationwide – roughly one in every two Canadian adults. This widespread adoption places it third in Adviso’s ranking of preferred loyalty programs among Quebec consumers, behind Domino’s Pizza and McDonald’s.
It remains to be seen whether this position will hold, as some PC Optimum members have indicated to Dunnhumby that the program feels less rewarding than it once did. The increasing complexity of available offers is also contributing to this sentiment.
Maxi also outperforms Costco in terms of speed and convenience, the fourth most important factor for consumers.
Some customers feel Costco’s popularity has led to overcrowding, particularly on weekends, making navigation difficult and checkout lines excessively long. This highlights the challenges of maintaining customer experience during periods of high demand.
However, Costco continues to excel in product quality. Some Maxi shoppers have expressed concerns about the freshness of produce, noting it doesn’t last as long as that offered by other retailers.
In total, Dunnhumby analyzed 28 grocery chains representing 97% of the Canadian market, which is valued at $115 billion.
The study’s strength lies in its methodology, which combines survey data from 6,000 Canadians with the financial performance of the companies themselves. This allows Dunnhumby to publish its Retailer Preference Index (RPI). The Canadian assessment has been conducted for two years, while the methodology has a longer history internationally.
This is unwelcome news for traditional retailers like IGA and Metro, which have lost market share since the price surge of 2023.
Empire, IGA’s parent company, reported an 8% decline in profits for the quarter ending November 1st. Metro has fared better, thanks to the conversion of Metro stores to Super C and its moi program, which ranks ninth in popularity in Quebec, according to the LoyauT study.
Notably, almost all retailers in the top third of the rankings prioritize pricing to attract customers. This strategy has proven effective in the wake of three years of high inflation in grocery stores, allowing them to increase their market share. However, Super C, which also focuses on low prices, did not see a corresponding rise in the rankings – a result the report does not explain.
In Quebec, the message from consumers is clear: loyalty is earned through promotions and rewards. It remains to be seen whether Maxi can maintain this lead against a powerful American competitor known for consistently surprising the market.
Who are you betting on for next year?
