Alimentation Couche-Tard says shopping patterns have changed during COVID-19 lockdowns with consumers purchasing larger-sized goods and stocking up on beer, wine and tobacco products.
The Quebec-based convenience store chain says there has been strong growth in the sale of alcoholic beverages, in jurisdictions where these sales are permitted.
"With the closure of bars and restaurants, we saw a movement in packaged beverage towards larger take-home packages, particularly impacting all beer segments as customer buying shifted to larger pack formats,'' CEO Brian Hannasch said June 30 during a conference call about fourth-quarter and record full-year results.
Couche-Tard beat expectations as it reported a fourth-quarter profit of US$576.3 million or 52 cents per share for the period ended April 26, up from US$293.1 million or 26 cents per share a year earlier.
He noted that there was a shift to cases of 24 and 30 beers from six-packs, along with grocery-sized packages of salty and confectionery items.
"There was also a notable shift from instant consumption or single-serve to take-home packages in that category.''
Even with traffic starting to improve as the economy reopens, Hannasch told analysts that he's been surprised that some of the larger-sized formats remain popular as customers are limiting their shopping trips.
"We've also gained new customers as we stayed open throughout the pandemic to meet their needs for emergency products, impulse buys and grocery items, which became increasingly popular, and we're seeing some stickiness,'' he said.
Sales of food, fountain soft drinks and coffee, which declined with lower consumer traffic, have started to increase. But fuel volume, which suffered big drops as people worked from home, is coming back more slowly than merchandise in Canada "and remains a challenge.''
Hannasch said the shift to larger packages was "pretty global'' even though alcohol sales aren't available in Europe or much of Canada.
But he cautioned that it's premature to say whether the changes in consumer habits will be permanent.
"What could have been the worst of times is turning us into a better, stronger company moving forward with our strategic growth plans and making it easy for our customers' lives every day even during these difficult days.''
Meanwhile, Couche-Tard has joined Canadian grocers in ending its "appreciation'' pay boost for workers. The $2.50 per hour increase ended June 12 in the U.S. and June 22 in Canada.
"We still have some thank-you bonuses in the summer for qualified workers and we also kept health benefits through the end of our calendar year for our employees,'' said chief financial officer Claude Tessier.
Tessier added that the novel coronavirus could create some acquisition opportunities for the global retailer as smaller operators and chains struggle to keep up with investments in technology and enhanced safety measures for customers and employees.
"This could even be truer if we are going into a prolonged period of weakness or recession that could reduce their ability to deliver a strong performance.''