Price Check: Discount Grocery Stores Set to Largely Outperform Their Conventional Peers Worldwide in 2023

DBRS Morningstar released a commentary titled “Price Check: Discount Grocery Stores Set to Largely Outperform Their Conventional Peers Worldwide in 2023.” While the global food retail sector as a whole is generally more resistant to macroeconomic challenges compared with other industries, we expect discount grocery stores to fare better than their conventional peers in 2023. That said, we anticipate volume growth trends to gradually return to historic levels as economic conditions normalize and believe any resulting structural changes will not be material enough to be the primary driver of any near-term rating actions within our portfolio.

“Although discount grocery stores' volumes were mostly outpaced by conventional stores during the Coronavirus Disease (COVID-19) pandemic, given the changes in consumer behaviour following surging levels of inflation and rising interest rates, we expect the reverse during this continued period of economic distress,” notes Moritz Steinbauer, Vice President, Team Lead Diversified Industries.