Supermarket Benefits |  Loblaw differentiates itself from its competitors

Supermarket Benefits | Loblaw differentiates itself from its competitors

Loblaw is the only Big Three grocery brand whose 2022 gross profit exceeds its best performance in the past five years. This “erratically strong” performance from the retailer managed by Maxi and Provigo comes at a time when many consumers suspect grocery stores are taking advantage of inflation to line their pockets.

Posted at 5:00 am

Nathaelle Morissette

Nathaelle Morissette
Press

The finding comes from a report to be released Thursday by Dalhousie University’s Agri-Food Analytical Sciences Laboratory titled “Profits in Food Distribution: A Threshold of Moral Accessibility? “.

The Laboratory team, led by Sylvain Charlebois, wanted to check whether there had indeed been “abuse” by the big brands. “And if there is abuse, what does this greed look like in food distribution? Can we create a threshold of moral tolerance in food distribution? Mr. Charlebois asked before beginning his analysis.

His conclusion: In Loblaw’s case, “we’ve reached a point where some people might be concerned because the data far exceeds numbers that could represent a very, very good year.” »


PHOTO MARTIN CHAMBERLAND, LA PRESSE ARCHIVES

Sylvain Charlebois leads the team at the Agri-Food Analytical Sciences Laboratory at Dalhousie University in Nova Scotia. He is also a regular contributor to the Business section of Press.

Therefore, the researchers examined the average gross profits and the highest profits of the top three retailers (IGA, Metro and Loblaw) over the past five years and then compared them to the performance of the first two quarters of 2022.

“Loblaw is the only major Canadian grocer whose gross profit in 2022 exceeds its best performance in five years, by $68.1 million in (Q1) and $112.0 million in (Q2),” the report reads.

“When we did this exercise, we found that Metro and Empire/Sobeys returns were below their best years so far in 2022, with a deficit of $10.8 million and $36.9 million, respectively,” the document states.

Remember that with consumer bills constantly rising at supermarkets, Canada’s Competition Bureau recently decided to scrutinize rising food prices and take an interest in competition between major retailers. A study has been launched. The results will be known next summer.

Furthermore, Mr. Charlebois is also worried about what will happen next year. Since mid-October, Loblaw has frozen prices on its 1,500 No Name-branded products until January 31. “But recent news suggests there may be limits to these promises,” the report warns. Such a price freeze could leave Canadians wondering what they can expect on their grocery bills in February 2023, once the price freeze ends. »

The signs react

For their part, brands, such as the Retail Council of Canada (RCCC), which represents them, continue to insist that their profit margins have remained stable in recent years.

“Like many others before it, this study looks at food prices without even looking at the entire chain, including big price increases from major manufacturers,” recalled Johanne Héroux, Senior Director of Corporate Affairs and Communication, Loblaw, in a statement. email sent to Press.

Inflation is most visible in the retail industry, although we are not the cause. Inflation is a global problem, and the prices on our shelves are the result of many costs from many companies in the supply chain.

Johanne Héroux, Senior Director, Corporate Affairs and Communications, Loblaw

“Metro’s gross profit margins have been stable for many years, as we’ve always said,” said Marie-Claude Bacon, vice president of public affairs for the Quebec retailer. “Despite the misleading claims of some, we work hard every day to deliver value to our customers and help them through the current global inflationary environment. »

No one at IGA returned the call. Press.

More transparency

In addition, Sylvain Charlebois took advantage of the publication of the report to demand more transparency from retailers, in particular in their financial statements, analyzed by the researchers.

For example, in addition to food, Loblaw sells drugstore products, cosmetics, and clothing. “The frustration we had is simple: when you read financial statements, you don’t separate food from cosmetics and pharmaceuticals. Everything is jumbled. Time to untangle all of that,” he says.

“Will changing the way the figures are presented calm things down? asks Michel Rochette, Quebec president of the CCCD. “I’m not sure that if we changed it, people would be happier or less worried. I don’t know if being more transparent on the numbers would change anything. There are other groups that present their numbers differently and still get the finger of blame, even though their profit margins remain low. »


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