Join the Club: Warehouse Club Stores are Winning with Canadian Consumers

Join the Club: Warehouse Club Stores are Winning with Canadian Consumers

As retail shopping continues to evolve, the disruption of traditional retail business models is paving the way for warehouse club stores to thrive in Canada. In 2018 alone, $13.5 billion was spent in warehouse club stores, accounting for 12.5% of fast-moving consumer goods (FMCG) sales in Canada.

Warehouse clubs have been able to increase their share of the consumer wallet by increasing two key factors in store: the overall number of shopping trips and the average household spend. Warehouse club shopping trips totalled more than 110 million in 2018, with the average household spend reaching $1,565. These have increased 12% and 5%, respectively, since 2015. Individual shopping trips have increased as well, rising to $122 per trip—substantially higher than the $57 average basket size across all FMCG outlets.

So, why are consumers flocking to warehouse club stores? Across the country, 70% of consumers are trying to spend less on FMCG purchases, and warehouse clubs offer the ability to purchase in larger quantities, reducing the cost per use. In addition to purchasing larger sizes, Canadian shoppers have several other saving strategies they’ve been employing. Leading strategies include stocking up (81%) and buying products on sale (67%).

When examining regions across Canada, not all provinces are as developed when it comes to warehouse club. The channel is capturing the largest share of FMCG sales in the two most western provinces, Alberta and British Columbia (B.C.). In fact, B.C. leads warehouse club performance, with 15.1% of FMCG sales, followed closely by Alberta, with 14.8% of sales. On the other side of the country, Ontario lags behind with 11.7% of FMCG sales. But the province has seen the largest increase in share of wallet, growing 1.6% over the last four years and second only to B.C.

Across Canada, consumers are looking to save money and are choosing warehouse club stores for more of their FMCG purchases. These retail outlets are able to offer lower prices by eliminating frills generally associated with conventional retailers. While warehouse clubs are enjoying their moment in the sun, these stores, along with all retailers, must be ready, willing and able to reinvent themselves as necessary to maintain their consumers and share of wallet.