Canada’s grocery retail sector one of the most competitive on Earth: Sobeys CEO

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This article was published 04/12/2023 (1036 days ago), so information in it may no longer be current.

OTTAWA – The top executive at Sobeys asserted on Monday that Canada has one of the most competitive grocery retail sectors on the planet — even as Canadians continue to feel the bite of higher prices.

“Although our country’s food inflation has been among the lowest in the world, and Canada is among the most competitive nations on Earth when it comes to grocery retail, this provides little comfort to Canadians who are struggling,” Michael Medline told MPs on the House of Commons agriculture committee.

Medline is the CEO of Empire Company Ltd., which owns Sobeys and other grocery store chains.

His appearance came after the committee requested that the top execs of major grocers testify before the committee once again on their plans to stabilize prices.

Industry Minister François-Philippe Champagne announced this fall that Canada’s major grocers — Loblaw, Metro, Empire, Walmart and Costco — had shared plans to tackle rising prices that included discounts, price freezes and price-matching campaigns.

However, questions swirled about what exactly the grocers promised, given the details of the plans were not being shared publicly.

Now, Sobeys has outlined some of the initial steps it has taken.

The company says it historically freezes prices on 90 per cent of packaged products between November and January, and now, it has expanded that freeze to all such products.

“We also have meaningful plans and development to help stabilize food prices past January, but will not discuss these publicly as they remained commercially and competitively sensitive until launched in our stores,” Medline told MPs.

The rapid run-up in grocery prices following the COVID-19 pandemic has led to the heightened scrutiny of Canadian grocers, particularly as some of them have reaped high profits.

And while food inflation — a global post-pandemic phenomenon — slowed in recent months, prices continue to rise rapidly.

In October, grocery prices were up 5.4 per cent compared to a year ago. Meanwhile, Canada’s overall inflation rate was 3.1 per cent.

The phenomenon has raised questions about whether the industry is competitive enough. It even prompted the Liberal government to propose changes to the country’s competition law.

The NDP has been pushing the Liberals to strengthen the Competition Act even further, arguing that changes can be made that would help bring down food prices.

However, Medline maintained during his testimony that the grocery industry is very competitive, and he doesn’t see many barriers to entry.

“I don’t think there have been huge barriers to competition (in) this country, but I’m sure that the government will put in place in the Competition Act even even greater ways where we can compete, and we welcome all that,” he said.

In June, the country’s competition watchdog published a report saying Canada’s grocery sector needs more competition to help keep food prices down, give shoppers more choice and encourage new entrants.

Medline expressed frustration that Sobeys is grouped in with other grocers when it comes to the scrutiny of high profits during a time of elevated inflation.

“I get a little impatient that we’re jumbled up with the entire industry all the time. Every company is different,” Medline said, adding that his company has lower profit margins than its competitors and made less money last year than the year before.

Alistair MacGregor, the NDP agriculture critic, spoke to reporters Monday afternoonahead of the committee meeting and said he had reviewed the major grocers’ plans to stabilize prices.

“I can tell you after having reviewed the documents over the last couple of weeks that I walked away quite unimpressed,” MacGregor said.

MacGregor said the grocers agreed to share the plans with members of the House of Commons agriculture committee, and in return, the committee promised to keep their contents confidential.

But the MP said the plans include a lot of information that is already public.

“And to tell you the truth, a lot of the information contained in these so-called confidential documents are stuff I could have found by reviewing their weekly flyers and looking with a simple Google search.”

This report by The Canadian Press was first published Dec. 4, 2023.