Canada is on the lookout for an international grocer to enter its market, driven by years of consumer frustration over high food prices, much of it aimed at one dominant player. But could an Aldi or a Lidl truly solve the problem?
Last year, Emily Johnson voiced her frustration on Reddit about the soaring cost of food in Canada, focusing her ire on Loblaw, the country’s leading food retailer with nearly 2,500 stores. Her Reddit group, LoblawsIsOutofControl, quickly filled with photos of overpriced items, such as C$40 ($29.36; £23.06) for 1.4 kilograms of chicken. This outcry led Johnson and others to launch a nationwide boycott against Loblaw, protesting the disparity between rising food prices and the company’s record profits.
Galen Weston, Loblaw’s former president, became the public face of food inflation in Canada, frequently appearing in commercials and earning an annual salary of C$8.4 million. The backlash even inspired spoof T-shirts with a “Roblaw$” logo, prompting copyright complaints from the retailer.
The boycott, starting in May and continuing indefinitely, has sparked a national debate on grocery pricing in Canada and why companies like Loblaw remain profitable while many Canadians struggle to afford food. It has also drawn political scrutiny towards other major grocers in the country.
“Groceries didn’t used to be such an issue, but the prices have skyrocketed this past year,” said Terra Suffel, a 49-year-old single mother in Toronto. A C$200 shopping spree that once fed her family for a week now barely covers basic pantry items. Suffel, too, is boycotting Loblaw.
In response to these frustrations, Canada’s federal innovation minister has traveled overseas to attract an international grocer to increase competition and lower prices. However, experts argue that any new entrant would face significant challenges distinguishing itself from existing players, suggesting a more complex solution is needed for Canada’s affordability crisis.
Loblaw has maintained its commitment to being the “retailer of choice” for Canadians. In a statement to the BBC, the company said it is fighting inflation and plans to open more discount stores to offer affordable food.
Comparing Prices: Canada, UK, and US
Like many countries, Canada saw a rise in living costs post-Covid-19 due to supply-chain issues and labor shortages. While Canada’s food inflation peaked at 11.4%, lower than the UK and US, the overall figure doesn’t fully capture the situation. Comparisons show Canada is more expensive for certain everyday items.
Canadians are also grappling with a declining currency value against the US dollar, affecting the price of imported food and reducing purchasing power. Rising interest rates and housing costs further strain Canadian wallets.
“People feel the rising cost of food because they’re also dealing with increased mortgage payments and other expenses,” said Jordan LeBel, a food industry marketing professor at Concordia University in Montreal.
A major issue is the consolidation of Canada’s grocery market, dominated by Loblaw, Empire (Sobeys), and Metro, which control nearly 60% of the market. Walmart and Costco cover much of the rest. In contrast, the US market features more regional players, and the UK has 14 grocers with over £1 billion in sales annually.
Prof. LeBel suggests the Loblaw boycott signals Canadians’ frustration with the lack of choice and the dominance of grocery giants who have little incentive to tackle rising food costs.
International Grocers: Challenges and Opportunities
Francois-Philippe Champagne, Canada’s minister of innovation, science, and industry, has been discreet about which international grocers he’s courting. Documents obtained by the Wall Street Journal mention potential stores including Germany’s Aldi and Lidl, France’s Les Mousquetaires, and others from Turkey, Spain, and Portugal.
Retail experts warn that entering the Canadian market poses unique challenges. “The classic mistake all foreign retailers make is thinking Canada is the 51st US state,” said Amarinder Singh, a senior director at Kantar. Canadian shoppers’ needs vary significantly by region and cultural background.
Loblaw’s strong loyalty program, covering 40% of the population, also presents a hurdle for new entrants. “The challenge is engaging shoppers and capturing market share from established players,” Singh said.
Some critics view the minister’s international efforts as political posturing ahead of a crucial election, where the ruling Liberal Party lags in the polls. A spokesperson from Minister Champagne’s office confirmed discussions with foreign retailers about potential investments, but no further details were provided.
Prof. LeBel believes the government should also support regional players and local grocers, which could benefit the local economy and enhance market competition. Although the boycott’s impact on Loblaw may be limited, local grocers have seen a boost in traffic and sales since May.
Supporting local businesses, LeBel said, strengthens community fabric and improves market dynamics, offering a potential pathway to addressing Canada’s grocery price issues.
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