The Canadian Parliament unanimously adopted a motion on Monday recognizing that “corporate greed directly fuels inflation” in food. On the same day, Canada’s largest retailer, Loblaw, announced that it was freezing until January 31 the price of 1,500 No Name products, sold at Provigo, Maxi and Pharmaprix. What could be the benefits for consumers?
The message is clear. 327 members of the House of Commons, from all parties, supported the New Democratic Party’s motion calling on the government, among other things, to “launch an affordable and fair food strategy that tackles corporate greed in the grocery sector , including asking the Competition Bureau to investigate the profits of grocery store chains.
However, Loblaw President Galen Weston said in a statement that the historic rise in food prices is “largely out of [son] control “. With the measure announced, he says he is concentrating his efforts on what he can control, with the aim of “allowing consumers to better predict the amount to allocate to their food budget”.
The director of Food Banks of Quebec, Martin Munger, welcomed this measure, given that the number of people using his network has increased by more than 30% since 2019, so much so that he is struggling to meet demand. .
“It’s an advertising technique to show consumers that we care about them,” analyzes Maryse Côté-Hamel, assistant professor of consumer science at Laval University. This strategy has already been adopted by other channels in other countries, particularly in Europe, she points out.
Mme Côté-Hamel points out that Loblaw has chosen to freeze the prices of only one of its two house brands, which also markets President’s Choice. According to JoAnne Labrecque, honorary professor of marketing at HEC Montreal, the company made this choice because the Sans nom brand, already cheaper, is likely to retain consumers who are most influenced by price.
The competition should react
But if these customers continue to compare prices at multiple stores, they might find that some products will still be cheaper elsewhere, thanks to discounts or “unbeatable price” policies. “Loblaw’s strategy looks aggressive, but it’s a very competitive market, and other distributors may react,” said Ms.me Labrecque.
Metro has, moreover, notified the To have toby e-mail, that “it is an industry practice to be in price freeze from 1er November to February 5 for all private label and national brand grocery products (except “commodities” such as sugar or coffee) and this will be the case for all Metro banners”. “A few price increases received before October 31 may appear on the shelf, but no price increase thereafter,” wrote the head of communications, Geneviève Grégoire.
Can prices go up enough in three months to make a big difference for consumers? According to the Consumer Price Index released by Statistics Canada, the grocery basket increased by 1.7% between May and August, which is equivalent to $1.70 more on an order. of $100. The next three months are difficult to predict, but there are no signs of a significant decrease in prices, according to Mme Labrecque and M.me Cote-Hamel.
Mme Côté-Hamel also points out that consumers are unlikely to make up a grocery basket exclusively of No Name products. This brand contains mostly processed products and little fruit, vegetables and meat, she notes.
“Grocery stores know that consumers are going to have to buy them anyway. Will certain products have a strong increase to compensate for those whose prices are kept lower? asks the Laval University professor.
Recall that Loblaw’s adjusted net income increased by 22% in the most recent quarter of 2022, to reach $566 million.