The Canadian government is being called on to increase the level of competition in the Canadian grocery industry.
A new study from independent consumer agency Competition reports that Canada’s grocery industry is too concentrated, with most Canadians buying groceries from one of five companies: Loblaws, Sobeys, Metro, Costco, and Walmart.
According to the study results, the majority (81%) of Canadian consumers said they buy groceries one to three times per week — and the breakdown of those trips is concentrated between just five grocery retailers. That breakdown looks like:
- 49% Loblaws and the stores it operates
- 28% Sobeys and the stores it operates
- 25% Walmart
- 22% Metro and the stores it operates
- 18% Costco
- 28% Other grocery stores
Some Canadians have access to stores operated by independent grocers, however, it depends on where they live. Independent grocers face significant barriers to growth mainly because of the competitive threat they cause to the grocery giants, according to the study.
“Without government support, we should not expect independent grocers to significantly expand in Canada in the near future,” the study notes, adding that there is no quick fix to improve the state of competition in Canadian grocery, but there are steps that the government can take to improve the status over time.
The report makes four recommendations to governments in order to improve the competition in the grocery industry:
- Create a whole-of-government strategy to support the emergence of new types of grocery businesses
- Encourage the growth of independent grocers and the entry of international grocers
- Introduce accessible and harmonized unit pricing requirements to empower consumer choice
- Limit the use of property controls that make it difficult for new grocery stores to open
Since grocery prices have increased at their fastest rate in more than 40 years, Canadian shoppers are feeling the impact of inflation. The Competition Bureau said it conducted the study because, “Competitive markets empower consumers and drive businesses to lower prices, improve product quality, innovate, and bring valuable new products to market.”
“As we have witnessed the highest cost-of-living increases seen in a generation, Canadians are recognizing the relationship between a lack of competition and rising prices,” according to Commissioner of Competition Matthew Boswell. “Competition can help lower prices and make life more affordable for Canadians.”
The report highlights the findings of the “Retail Grocery Market Study” that the Bureau launched in October of 2022. That report examined the state of competition in the grocery industry and identified barriers to increasing competition. It also explored the potential for independent grocers, international grocers, and emerging business models to deliver more competition, innovation, and choice to Canadians.
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According to a new study, there isn't enough competition in Canada's grocery sector, which is ultimately contributing to price hikes for shoppers. Is this really an issue, or just the natural shift of the Canadian grocery market?
Let us know in the comments below, or email your thoughts to the SN staff at [email protected].
