Canada’s biggest grocers answer government’s call to rein in food pricing

After meetings with government officials, Canada’s five largest grocers—Loblaw Cos., Sobeys/Empire Co. Ltd., Metro Inc., Walmart and Costco—have agreed to take action to stabilize food prices.

Just before the weekend, Industry Minister François-Philippe Champagne reported that “initial commitments have been secured from the top five major grocery chains” in meetings over the past several weeks and that “the grocers are following through on their engagement to support efforts aimed at stabilizing food prices and to propose concrete actions by Thanksgiving.”

In mid-September, Canadian Prime Minister Justin Trudeau had announced plans to call the leaders of major grocery chains to “an immediate meeting” to discuss ways to rein in food pricing in the near term. Published reports said the retailers would have until Oct. 9 to issue proposals.

“The cost of groceries has risen drastically over the past [few] years, and Canadians are struggling to put food on their tables,” Champagne said in a statement. “Canadians are rightfully frustrated by this situation, and we are implementing solutions to bring relief to them.”

No details on the grocers’ price stabilization plans were disclosed, but each company “has already identified an initial series of actions that will be implemented in the coming days and weeks,” according to Champagne. He said their efforts are expected to include aggressive discounts across a basket of key items—representing the most important purchases for most households—as well as price freezes and price-matching campaigns.

Related:Canadian PM Justin Trudeau to convene grocers on lowering food prices

More oversight planned

The Canadian government also is taking additional measures to regulate the grocery sector. For example, Champagne said the Office of Consumer Affairs is creating a “grocery task force” charged with monitoring potentially anticompetitive practices by food retailers, such as “shrinkflation” and “dequalification,” the latter referring to product quality reduction to keep pricing down. In addition, the government aims to step up efforts to establish a “grocery code of conduct” to bolster fairness and transparency across the industry, including the supply chain.

To that end, plans also call for improved access to food pricing and cost breakdown information via the launch of a “food price data hub,” provided through a partnership of Statistics Canada, Agriculture and Agri-Food Canada, and key food-system partners.

Canada, too, plans legislative amendments to its Competition Act that would better enable the Competition Bureau—the nation’s antitrust watchdog—to crack down on industry collaborations that might squelch competition and consumer choice, including via mergers and the supply chain.

Related:Canada’s Grocery Rebate gets under way

“I will continue to keep a close eye on Canada’s largest grocery chains, the food processors and other industry actors to make sure that the price of food in Canada will be stabilized. It’s just the beginning,” Champagne added.

Retail group: Pricing actions already under way

Following Champagne’s report on the grocer meetings, the Retail Council of Canada said retailers already have contributed to lowering food prices in Canada. The retail trade group reported that Canada has seen lower food inflation over the past 12 months (6.8%) compared with other developed countries, such as the United Kingdom (13.6%), Australia (7.5%) and France (11.2%).

“Keeping food prices as low as possible is the top priority for Canada’s grocers since inflation surged at the end of the pandemic,” the Retail Council of Canada said in a statement. “Looking forward, we are starting to see abatement of some of the input costs that have impacted food prices for the past many months. Statistics Canada has already found that food prices in stores dropped from July to August, and grocers anticipate further progress over the next few months and into 2024.”

Related:Canada sounds call for more grocery retail competition

The council noted that Canadian grocers have engaged in “good-faith discussions” with the government on how they are helping consumers with “food price affordability” and adhere to competition law to not discuss prices as a collective. “This is why each grocer has made its own individual submission to government and will deploy its own approach to the challenge,” the organization said.

Grocery retailers, too, “are heavily dependent on what manufacturers charge for their products,” according to the Retail Council of Canada, which reported that 70% to 80% of checkout prices “arise from vendors before the food even gets to Canada’s grocers.”

“We are encouraged that Minister Champagne made several clear references to the need for manufacturers to step up with regard their central role in food pricing,” the council stated, “and we look forward to seeing some concrete deliverables from those government-manufacturer discussions.”