The Loblaws price freeze is a powerful symbol

There have been calls for Canadian grocers to voluntarily freeze the prices of certain commodities as we weather the current storm of food inflation.

The first grocer in the world to do this was over six months ago. Since then, many Western economies have seen grocers freeze prices, including the German giant Lidl and the famous French multinational Carrefour. Canada has had no grocers pursuing this strategy; none, that is, so far. This week, Loblaw Companies Ltd. became the first Canadian grocer to voluntarily freeze prices on a variety of food products.

In an unprecedented move, the number one grocer has frozen the prices of more than 1,500 private label products sold across the country until the end of January 2023. This was long overdue for Canadian shoppers, especially 25% struggling to cope with food inflation. .

Consumers and politicians have repeatedly criticized Canadian grocers – all of them – for price gouging. Critics even prompted the Ottawa parliamentary standing committee on agriculture to launch an investigation into the matter just weeks ago. The industry desperately needed to do something about its own reputation.

Some criticism was expected and probably deserved. Given what happened with the bread pricing system, few consumers have forgiven the industry even after all this time. In December 2017, Loblaw and Weston Bakeries admitted to participating in a bread price-fixing scheme for 14 years. Indeed, Canadians were able to claim a $25 gift certificate, but not a single person in the industry was fined or jailed. Things would have turned out differently in the United States.

To the credit of our grocers, however, the financial numbers don’t necessarily tell us that grocers are abusing their oligopolistic powers, even in the current inflationary environment. Many will want to believe this, but the evidence just isn’t there. Although Loblaw’s numbers are slightly higher than usual this year, it’s not like other economic sectors.

Take banking, for example. Last year, Royal Bank of Canada alone made more money in a single quarter than all Canadian grocers – including Loblaws, Sobeys and Metro combined – in the entire fiscal year.

While some will appreciate Loblaw’s empathetic gesture, the grocer’s latest campaign will likely bring a bit of cynicism along the way.

Some would say that the price freeze for a period of time is an admission of guilt on Loblaw’s part. Not necessarily. Food inflation is a global phenomenon. Rising costs have severely affected the entire global agri-food sector. Even though Canada has the third lowest food inflation rate among the G7 countries, Canadians could not have been spared.

Some will also claim that other products will increase even more, penalizing those who do not want to buy the products that are part of the campaign. It is certainly possible, but freezing the prices of more than 1,500 products for more than three months in the food retail trade is quite telling.

Although Canadian grocers should have done this a while ago, Loblaw picked the right week to somewhat tame the eventual barrage of profiteering accusations that always accompany the CPI report. The report will likely remind Canadians once again that food has become more expensive.

Overall, Loblaw’s decision was easy to execute. Negotiating with contractors who support the grocer’s brands is not that difficult. It just needed a plan. The campaign is highly symbolic and will show that the grocers of our country have a heart. Hopefully other companies will follow.

dr. Sylvain Charlebois is Senior director of the food industry analytic laboratory and a teacher in food Distribution and Politics at Dalhousie University. © Troy Media

James V. Hayes