Canadian banks and the real estate industry – ‘our biggest security blanket’ – are well poised coming out of the recession, Carman Allison, director of industry insights, Nielsen Company, tells MiC. These positive economic factors, when combined with new job-market buoyancy, have resulted in a gradual increase in consumer confidence, which grew 16 points this year to an index score of 100 and is now considered ‘neutral.’

However, there are still a lot of recession-related concerns that make consumers nervous, as 65% of Canadians surveyed by Nielsen in March of this year said they will continue to demonstrate restraint in their purchasing habits. This makes sense if one considers the harmonized sales tax (HST) that’s coming into effect next month in Ontario and BC, the potential rise in interest rates and recent plans by Ontario Hydro to increase rates by 20%, Allison says.

‘As a result, you’re still going to be value-focused and look for ways to save,’ he explains. ‘You can’t look for a deal on electricity but you can definitely look for a deal when it comes to buying consumer packaged goods on a day to day basis.’

No more staycations or hand-me-downs

When asked which cost-saving measures they’ll continue even after economic conditions improve, Canadians appear to be getting tired of staycations and movie nights in. Just 31% said they would cut back their spending on out-of-home entertainment, while 64% reported doing so during the recession. Just 12% of Canadians surveyed said they would forego their annual holiday this year, which is what 29% did the year before.

Similarly, wardrobe upgrades are in order for many Canadians, as only 29% said they plan to continue to spend less on new clothes, which is a measure 64% said they took last year.

However there still seems to be a takeout takedown: 46% said they will continue to cut down on take-away meals (compared to 64% last year). As a result, the grocery industry was up about 5% last year, says Allison.

‘Some of the categories that did really well during the recession were produce, meat, dairy products – all the things that are fundamentals in home cooking,’ he says.

Brand name vs. private label

But were consumers really making the switch to private, discount labels? About 51% of Canadians said they did last year, and 91% said they would continue to buy private label instead of national brands even as the economy improves. But this is a case where what consumers say and what they do don’t necessarily add up, says Allison.

‘What we see is that private label [brands] in Canada grew over 2% on a dollar basis, so there was a little bit of growth there. However, national brands grew at 4%, so even though 51% of us said that we were going to buy more private label, at the end of it all, if we look at private label share, it actually declined from 18.7 share points in 2008 to 18.4 share points in 2009,’ says Allison.

The fact that private label actually lost ground to national brands might be related to the fact that the latter were featured and promoted more during the recession by discount retailers, he explains.

‘All you have to do is pick up a front page of a No Frills flyer and it’s covered with the names and brands that we all recognize. They do that to generate traffic and bring people into their store,’ he says.

The discount store growth

The role of the discount store during the recession has been an important one, but Ontario is more saturated than most – almost half (46%) of the grocery stores in the province are of the discount variety. But now, many discount retailers are hoping to repeat that success story out west and in the Maritimes, says Allison.

This means the price battleground for grocery basics is just heating up. In Canada, 31% of all the items going through the grocery checkout have had some type of price cut, says Allison, which is up ‘quite significantly’ from 2007 when this figure was about 25%.

Out west, the retailers that are best positioned to cut the costs on basics like milk and eggs are Walmart and Safeway, both of which have announced they would do so, he says.

And while the discount market in the Maritimes is only 12.3% of the grocery retail share, Loblaw has recently opened its first No Frills in Halifax.

‘When consumers go into the store, they’re looking for lower price points. They find those promotions very appealing, and as a result they might switch brands at the store if there’s a promotion that’s attractive and that’s meeting that value need,’ he says.