(OTTAWA) An unlikely alliance between Canada’s independent grocers and the country’s three largest chains is forming amid accusations that grocery stores are responsible for soaring food prices.
Lawmakers took turns lambasting executives from Loblaw, Metro and Empire at a parliamentary hearing in Ottawa on Wednesday, accusing retailers of driving up food prices to boost profits.
The allegations prompted a generally vocal critic of the Big Three to take the unusual step of defending them on the issue of food inflation.
“I’m by no means an apologist for chains — we have a lot of problems with them,” Gary Sands, senior vice-president of public policy for the Canadian Federation of Independent Grocers, said Thursday.
“But independents are seeing the same supplier increases as chains,” he explained. Retailers at the end of the supply chain have become the focus of everyone’s anger over rising food prices […], but we know that these factors are beyond their control. »
The problem is that food suppliers pass on cost increases to grocers.
While vendors used to raise prices once a year, Sanders noted that they now raise prices two or three times a year, often with increases of more than 10%.
And independent grocers are getting the same staggering price increases from food suppliers as the big chains, he said.
There is simply no business model in Canada where it is impossible to prevent these increases from being passed on to customers.
Gary Sands, Senior Vice President of Public Policy, Canadian Federation of Independent Grocers
Still, major grocers posted exceptional financial results amid high grocery inflation, which hit 11.4% in January, compared to the same month last year.
The Big Three grocers posted higher profits in the first half of 2022 compared to their average performance over the past five years, according to a report from Dalhousie University.
These companies defend themselves by saying that their profits may have increased, but their food margins have remained stable.
They said the higher margins came from drugstore, cosmetics and apparel sales, while overall sales benefited from the migration of consumer spending from restaurants to grocery stores.
Loblaw Chairman Galen Weston told MPs on Wednesday that the company’s profits amounted to about $1 for every $25 spent on groceries.
As Canadians search for a culprit, Sands noted that rising food prices have come from confluent factors: the invasion of Ukraine, droughts and floods, rising energy costs and labour, border disruptions and avian flu.
“We are all looking for a Sept-Heures man to attribute the price increase to, but he does not exist,” he said. We can’t even just blame the suppliers because their input costs are also increasing. »
Code of conduct in preparation
Meanwhile, Mr. Sands — a member of the committee creating a new code of conduct for grocery stores — said he was happy to see support for the code expressed by Loblaw, Sobeys and Metro.
“I look forward to hearing similar support from Walmart and Costco. »
The parliamentary committee unanimously approved a motion to invite the heads of Walmart Canada and Costco Wholesale Canada to testify.
Mr. Sands pointed out that an important part of the grocers’ code of conduct has been completed. The committee still deals with areas related to arbitration, enforcement and governance, he added.