Carman Allison, Director Shopper & Industry Insights, The Nielsen Company
Unlike its U.S. neighbor, where consumers are taking less drastic measures to deal with rising gas prices than in previous years, Canadians continue to feel the pain at the pump. A recent Nielsen study shows that 86 percent of Canadians indicate that rising gas prices are impacting driving and shopping habits – a 31 percent increase since 2010.
Gas prices in Canada have increased 30 percent in the past year, which is costing the average household an additional $73 per month for a monthly outlay of $300. The current average price for regular gasoline is $1.31 per litre, which is 30 percent higher than comparable U.S. prices. When prices exceed $1.75 per litre, the monthly gas bill will actually exceed the grocery bill (average monthly grocery bill is $403).
Gas prices vary by region, from a current average low of $1.22 per litre in New Brunswick to a high of $1.38 in Newfoundland. Consumers in eastern Canada are impacted the most.
No Place Like Home
Rising gas prices mean consumers are likely to opt for more stay-at-home activities. More than half (55%) of Canadians say they plan to do more things at home. One-third of households will consider grocery home delivery (32%), shop close to home (31%), seek out low-priced gas stations (31%), use lower grades of gas (31%) and 14 percent will eat out less often.
Nielsen data shows that with the recent rise at the pumps, overall consumer shopping trips are down. While dollars per trip are slightly up in the first quarter (+2%) compared to fourth quarter results, shopping trips have decreased five percent in the same time period. One coping mechanism to minimize drive time is using a carpool, which is being deployed by 24 percent of households.
Consumers are taking measures to offset the rising prices at the pump. One in five (21%) plan to buy less expensive brands, 17 percent intend to purchase larger pack sizes, 15 percent will look for savings at warehouse club outlets, 12 percent say they will combine errands/trips, 11 percent aim to stock up the pantry and 4 percent are determined to save by using more coupons.
As household wages are not keeping pace with inflation, consumers are digging deeper into their pockets to pay for ‘everyday’ things. Retailers and manufacturers should look for opportunities to convert a likely decline in out-of-home eating and entertainment spending for more at-home options.
Value messaging continues to be important, but messaging should connect to consumers emotions with themes centered on family fun enjoyment, which in the end, is what matters most anyhow.