Making an effort to detail its findings in “plain language,” the Competition Bureau highlighted the need to communicate clearly on the issue to promote transparency.
The bureau said most Canadians buy groceries in stores owned by giants Loblaw, Sobeys, and Metro, with rising prices signalling a need for more competition in the sector.
Here are five key takeaways from the report.
Harmonized unit pricing requirements as a potential solution
Among the four main recommendations contained in the report, the Competition Bureau called on provincial and territorial governments to consider introducing accessible and harmonized unit pricing requirements.
That would force grocers to display the price of a product based on a standard package size, alongside the total price. For instance, for two differently sized containers of apple juice, a store would have to disclose the total price, along with the price per 100 millilitres, to provide an apples-to-apples comparison.
Noting the difficulty consumers face when trying to compare prices on similar items between different stores, the bureau said the requirement would give shoppers more complete information about their options: “It serves as a quick and easy way to know if a consumer is getting the best deal _ without resorting to a calculator or mental math.”
Many grocery stores already display unit pricing, but Quebec is the only province or territory that requires it by law. The bureau said governments should consider whether the requirement is appropriate for all grocers, or just large chains due to the potential burden on smaller independents.
2:08 Food inflation: More competition needed to tame high grocery prices in Canada, report argues
Not every company played ball
During its study, the bureau said the level of co-operation it received from Canada’s grocery giants “varied significantly and was not fulsome.” In many instances, it said it was unable to obtain complete and precise financial data, despite repeated requests.
Unlike when conducting law enforcement investigations, the bureau could not compel the release of information for its study, instead relying on information that was publicly available or provided voluntarily. It said it consulted with a variety of grocers, both in Canada and internationally, many of which “were happy to speak with us, and we appreciate their candour and assistance.”
“Others were more reluctant to share information with the Bureau,” it stated. “This did limit our ability to fully answer some questions that are top of mind for Canadians ? Nevertheless, the absence of this information did not prevent us from identifying important ways in which grocery competition could be increased.”
The bureau said its inability to compel information highlights the need for formal information-gathering powers and it continues to advocate for legislative changes to improve the Competition Act in that area.
A consolidated sector and the bureau’s hands tied
The report pointed out that even if you don’t shop at a store called Loblaws, Sobeys, or Metro, you may be shopping at another store that they own or are affiliated with, as all three companies have over 1,000 stores each, including franchised locations. Along with Costco and Walmart, that means just five large grocery chains operate in Canada.
But back when the Competition Act was introduced in 1986, there were at least eight large grocery chains across Canada, each owned by a different company. Five of the large chains that were around 37 years ago were bought by their competitors, including Steinberg’s stores being sold to A&P, Metro, Provigo and IGA, Provigo’s stores to Loblaws, IGA’s stores to Sobeys and Loblaws, A&P’s stores to Metro, and Safeway’s stores to Sobeys.
The bureau said it heard from some who feel Canada’s laws don’t do enough to stop deals that are bad for competition. But it said that when a big grocer buys up a small number of stores in urban areas, it is often difficult to stop them due to the challenge of proving it will lead to significant price increases.
“Despite concerns often being raised when a big company buys a smaller competitor, the reality is that consumers typically only lose one of many alternative stores,” it said.
“The law in Canada typically will not allow the Bureau to intervene in these deals, as they are generally seen as unlikely to have a significant impact on prices and other dimensions of competition.”
The rise of online shopping
With more Canadians purchasing their groceries online, grocery giants have invested significantly into their online business models, which the bureau said has been a boon for consumer choice.
But it cautioned that online shopping may have simply created a new way to access existing options, rather than increase competition. It said online platforms can provide a new way to source products from a pre-existing retailer.
Meanwhile, delivery services often act more like grocery store partners than independent competitors, meaning they can’t charge lower prices than the store they buy from without taking a loss.
To leverage the rise in online shopping habits and meaningfully bolster competition, the bureau said Canada will need to see truly independent online grocers emerge.
“Grocery business models are adapting to the online world and, with that, comes the opportunity for new competitive alternatives to emerge,” it said.
Where are the international grocers?
The bureau also studied why few international grocers, aside from Walmart and Costco, have entered the Canadian market. It said it heard from companies not currently in Canada that there are a number of reasons why they haven’t sought to bring their business here, including the fact that Canada’s existing grocery giants would be “daunting competitors.”
Others cited high-cost factors such as Canadian grocers’ vast selection of ethnic products, which would be challenging to replicate, and laws requiring bilingual labels on packaged foods.
Some noted that while Costco and Walmart found success in Canada, other international companies such as Target did not, prompting worries of a similar experience.
To successfully enter Canada, some international grocers noted that it would be crucial to establish distribution networks, relationships with Canadian suppliers and brand recognition. For those reasons, many feel it’s easier to continue focusing on expansion in their current regions instead.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
