image source, President’s Choice/YouTube
- the author, Nadine Yousif
- role, BBC News, Toronto
Canada is looking for an international grocer to enter its domestic market after years of anger from shoppers over high food prices, much of it directed at one of the big players. But would an Aldi or a Lidl solve the problem?
Late last year, Emily Johnson took to Reddit to share her frustration with how expensive food has become in Canada.
She became fixated on one grocer in particular: Loblaw, Canada’s dominant grocer, with nearly 2,500 stores.
Her Reddit group – called LoblawsIsOutofControl – was filled with photos of food items for sale at seemingly exorbitant prices, such as C$40 ($29.36; £23.06) for 1.4kg of chicken.
Soon after, Ms. Johnson and others joined together to launch a nationwide boycott against Loblaw, saying they were fed up with the disparity between rising grocery prices and record profits.
As outrage grew, former grocery store president Galen Weston, who has defended profits, became the de facto face of food inflation in Canada, thanks to his regular appearances in Loblaw ads and his reported annual salary of 8.4 million dollars.
Some even started selling t-shirts with a fake “Roblaw$” logo, which was met with complaints of copyright infringement from the seller.
The boycott, which began in May and is set to continue indefinitely, has since sparked a national conversation about what grocery prices are like in Canada and why a company like Loblaw remains profitable while more Canadians struggle to afford food.
It has also sparked political pressure and scrutiny over the food practices of not only Loblaw, but other major grocers in the country.
“Food cravings weren’t such a problem, but prices have skyrocketed in the last year, so we’ll go without anything frivolous,” Terra Suffel, a 49-year-old single mother of two who lives in Toronto, told the BBC. .
image source, Getty Images
The $200 AC shopping spree is used to feed Mrs. Stuffel and her children for the entire week, she said. Now it barely covers lunch ingredients and pantry essentials.
“We can’t really afford a lot of meat and our main protein right now is eggs,” she said, adding that she, too, is boycotting Loblaw.
In response to frustrated Canadians like her, Canada’s federal innovation minister has since made several trips overseas to woo an international grocer to set up shop in Canada in an effort to increase competition and lower prices. of foods.
But experts say any foreign grocer looking to enter Canada’s market faces an uphill battle to differentiate itself from existing players and that the country’s unaffordability crisis may require a more complex overhaul.
Loblaw has responded to the boycott by saying they remain committed to being the “retailer of choice” for Canadians.
In a statement to the BBC, the company added that it plans to open more discount stores to make affordable food more accessible.
How expensive is food in Canada?
Like many other countries, Canadians saw the cost of living rise after the Covid-19 pandemic thanks to supply chain issues and labor shortages.
Although food inflation in Canada peaked at a lower point, 11.4%, than in the UK and US, according to data from the Organization for Economic Co-operation and Development, the overall figure does not tell the whole story.
A price comparison between the three countries of some everyday items suggests that Canada is indeed more expensive for some of those regular shopping basket contents.
Canadians are also dealing with a currency that is depreciating against the US dollar, which has affected both the price of food imported from the US and the overall purchasing power of Canadians.
Rising interest rates, along with higher rents and home prices, have squeezed the wallets of many people in Canada.
“People are feeling (the increase in the cost of food) because they’re also feeling the increase in mortgage payments and other things,” said Jordan LeBel, a marketing professor with expertise in the food industry at Concordia University in Montreal.
Another issue is the highly consolidated nature of Canada’s food market, Prof LeBel said.
The country’s industry is dominated by three major companies: Loblaw (which operates Loblaw stores), Empire (which operates Sobeys stores), and Metro.
They account for nearly 60% of the grocery market share while Walmart and Costco make up most of the rest.
In comparison, the US grocery market has more regional players. And while Walmart is by far the most popular chain across the country, there are more than a dozen other grocers that compete meaningfully with it.
Similarly, the UK market is also diverse, with a total of 14 businesses turning over £1 billion in grocery sales annually.
Prof LeBel said the Loblaw boycott is a signal from Canadians who are fed up with the lack of choice and the country’s grocery giants, who lack an incentive to meaningfully address rising food costs.
Would a foreign grocer help?
Francois-Philippe Champagne, Canada’s minister of innovation, science and industry, has been tight-lipped about which international grocers he is trying to judge.
But government documents obtained by the Wall Street Journal in April named 12 potential stores, including Germany’s Aldi and Lidl, France’s Les Mousquetaires and other companies from Turkey, Spain and Portugal.
The discount supermarket chain Aldi already has nearly 2,400 stores in the US. It is also the fourth largest supermarket in the United Kingdom.
Its main competitor Lidl has a footprint in the UK and US as well, albeit a smaller one than Aldi.
Despite their popularity in other countries, retail experts say breaking into the Canadian market comes with its own unique set of challenges.
“The classic mistake that all foreign sellers make when they come to Canada is that they think it’s the 51st state of the US,” said Amarinder Singh, a senior director at consulting firm Kantar.
In reality, Canadian shoppers are very different, he said.
Their needs differ regionally, he said, whether they live in Atlantic Canada or British Columbia, or whether they call a large metropolitan city like Toronto home.
image source, Getty Images
Canada is also a very multicultural country with 20% born elsewhere and a national grocer needs to target them to find success, Singh said.
Another factor to consider is that Loblaw’s robust loyalty points program covers 40% of Canada’s entire population.
“The issue is how do you engage shoppers and steal share from the Loblaws, Sobeys and Metros of the world, who have such a strong hold on this market,” Mr. Singh said.
Some have said the minister’s international tour is a bit of political theater ahead of a consequential election for Canadians, with the ruling Liberal Party trailing sharply in the polls.
“Going after a big player, you have meetings, photo ops – it feels like you’re doing something,” Prof LeBel said.
A spokesman from Champagne Minister Riyadh Nazerally’s office confirmed to the BBC that he has spoken to foreign retailers about “possible investment in Canada”, but did not elaborate.
Canada is working on other measures, such as reforming the Competition Act to make it friendlier to new entrants, he added.
Prof LeBel said he believes the government should also focus on building up existing regional players and small local grocers.
Experts have said the boycott’s impact on Loblaw is likely to be limited. However, local, independent grocers across the country appear to be benefiting, with some seeing a significant increase in traffic and sales since the start of May.
Supporting local players, Prof LeBel said, goes a long way in building the local economy and the fabric of a community, improving market competition.