Grocery habits may be returning to normal after inflation surge: Empire CEO

globalnews.ca:

The head of one of Canada’s largest grocery chains says he’s seeing the early signs of consumer behaviour normalizing after years of trading down and cutting back in the cost of living crunch.

Michael Medline, CEO of Sobeys parent company Empire Co., told analysts on the company’s earnings call Thursday that the past quarter saw “small, gradual improvements” in consumer activity across the company’s national banner of grocers.

Foot traffic in Empire’s stores, which also include FreshCo and Farm Boy, continues to grow, Medline said, and the company is seeing smaller declines in average basket size.

“Promotional penetration” is also flattening after multiple quarters of gains, he said.

Empire COO Pierre St-Laurent noted that there are signs of consumer “appetite” returning for fresh foods.

“When we looked at consumer trends over the past quarter, we’re seeing several early indications that customers are returning to a more favourable and predictable shopping behaviour,” Medline said.

“While it will still take time for stretched customers to fully return to the more typical purchasing behaviours, these actions are translating into the very early innings of positive sales activity for Empire.”

Medline pointed to easing inflation at the grocery store as helping to drive the upticks last quarter, which saw Empire’s revenue rise year-over-year even as profit fell.

Overall inflation has continued to cool in Canada this year, with annual price hikes at the grocery store easing to 2.1 per cent in July. But sticky pressures, particularly on rent and mortgage costs, also need to cool before consumer behaviour returns to historic norms, Medline said.

“We needed inflation to get back down to normal levels — it has — and we need to