Loblaws decided last January to cut sales of ugly fruits and vegetables and near-expired products by 50%. Faced with popular dissatisfaction, the food giant decided to reverse its decision.
Apparently, Loblaws initially justified this decision by saying that all banners on the market offered a maximum of 30% off these products. Because there is no real competition in the Canadian market, no grocer has an interest in offering a more competitive price than the other. In economics we call this an oligopoly.
It is not surprising that Loblaws, IGA and Métro were involved in the bread cartel from 2001 to 2021. For 20 years, Canadian companies artificially inflated prices to illegally reap more than $5 billion.
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Fewer and fewer discounted products
Products are 50% off at Loblaws and 30% off elsewhere because grocers everywhere order too much product compared to what is actually consumed. It's difficult to say to the nearest unit how many breads, tomatoes and muffins are sold to 9 million Quebecers each day or week. Weather, preferences, advertising and chance may vary demand.
That's why we sell these products on clearance because it's better than throwing them away. But grocers have a plan.
Through their loyalty programs, grocery giants now know where and at what time you purchased each item. This allows them to better predict what you will buy. It is clear that one of the objectives of these programs is to reduce the number of unsold products and therefore the number of products offered for sale.
Through our voluntary participation in loyalty programs, we contribute to the gradual disappearance of offers. The more Quebecers take advantage of the small points offered by grocery giants, the fewer products there are at a discount.
Amazing winnings and bonuses
To justify themselves, the bosses of the big chains and some of the academics they pay hastened to tell us that margins had remained virtually constant.
Let's imagine a scenario: you invest $100 to sell amulets for $1. Inflation comes and now your charm is worth $2. The margins stay the same, but you make twice as much profit. Have you taken a bigger risk? NO. Are you working harder? NO.
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They exploit a captive market to make more profits for no benefit.
Since 2020, Loblaws shares have increased 100% and Metro shares have increased 44%. Are we supposed to believe that these meteoric increases in profitability, dividends, bonuses and executive compensation are the result of their incredibly intelligent work?
Food giants are exploiting an oligopoly situation to take more and more money from consumers and thus concentrate even more of this wealth in their coffers. It's high time for that to change.