TORONTO-
Canada’s largest grocer is freezing prices on all of its no-name products until next year as double-digit food inflation sends grocery bills skyrocketing.
Loblaw Companies Ltd. said on Monday it had frozen prices for the popular private label, which includes more than 1,500 grocery items, until Jan. 31, 2023.
In a letter shared with customers, Loblaw Chairman and President Galen G. Weston said the price of an average basket of groceries has risen about 10% this year, with some items like apples, soup and fries increasing even more.
“Infuriatingly, a lot of this is out of our control,” as food suppliers pass the higher costs onto Loblaw, he said.
While the grocery chain opposes unfair price increases, most are reasonable and stem from increasing supplier base costs, Weston said.
In an effort to help Canadians “curb food inflation,” Loblaw is locking in prices for No Name and promising more deals in the coming weeks, he said.
“Anyone who regularly visits the grocery store knows that over the past year the cost of food has increased rapidly,” Weston said in a letter shared with members of the company’s PC Optimum loyalty program.
The private label price freeze with distinctive yellow and black packaging follows similar announcements made by grocers in other countries.
In August, French supermarket chain Carrefour announced plans to freeze the prices of around 100 of its private label products until November 30.
In June, the US arm of German grocer Lidl launched a summer price-cutting campaign to ease the inflationary burden on customers. The company said it had lowered prices on more than 100 items at its stores in nine East Coast states through August.
“We’ve seen grocers voluntarily freeze prices across the G7 for some time now,” said Sylvain Charlebois, professor of distribution and food policy at Dalhousie University. “This should have happened a long time ago in Canada.”
Grocers are able to freeze prices on their house labels because they control the supply chain from inception to shelf prices, said Marty Weintraub, partner and national retail advisory leader at Deloitte. Canada.
“We’re seeing grocers around the world focusing on the value proposition around private label because they can frankly control (the supply chain) and there’s a good PR message that resonates with consumers,” did he declare. “It becomes much more difficult with national brands because…you don’t control the supply chain.”
The average price gap between house brands and national brands can be 15 to 20 percent, Weintraub said.
Freezing prices can be a “win-win” for retailers and consumers, he added.
“The retailer wins because their markups are higher on private label and the consumer wins because they paid less,” Weintraub said.
Canada’s big food retailers have come under fire in recent months as many chains have continued to post strong profits while consumers are hit with higher prices amid relentless inflation.
NDP Leader Jagmeet Singh said “greed” is driving rising grocery bills, suggesting “wealthy CEOs” are to blame for the rising cost of food.
He called Loblaw’s decision to freeze No Name’s prices a “positive step,” but said the grocer “could have acted much sooner.”
“We are concerned that they will freeze the higher prices, the inflated prices,” he told reporters as he discussed a motion to investigate food prices.
The no-name price lock will help fix some of the image issues Loblaw has faced in recent months, Charlebois said.
“It’s also a public relations strategy…many Canadians blame grocers for what’s happening with food inflation,” he said.
“Some of it is deserved … but much of this criticism is unfair because food prices can rise for a variety of reasons beyond a grocer’s control.
Meanwhile, Loblaw’s decision to freeze its house brand could inadvertently hurt small grocers in Canada, said Gary Sands, senior vice president of public policy for the Canadian Federation of Independent Grocers.
If price freezes amid continued inflation cut into Loblaw’s revenue, the company could seek to recoup those losses through tougher negotiations with suppliers — which in turn could raise prices for independent grocers, a he declared.
“We are concerned about this because, in our experience, when there is tension between the big chains and the big suppliers, there is usually a ripple effect on the independents,” he said. declared.
“If a large retail chain presses a large supplier and they acquiesce to those demands, we could see a ripple effect on how they in turn deal with smaller players in the market.”
This report from The Canadian Press was first published on October 17, 2022.
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