‘More stores can lower prices’: Industry experts weigh in on growing Loblaw stores, call on food retailers to increase competition

Loblaw's plans to expand locations is raising eyebrows with many Canadians demanding lower food prices instead of more stores

Canadian experts believe while Loblaws newly announced expansion plans to build more than 40 stores and renovate hundreds of others can result in reducing currently inflated food prices, it is the lack of competition among major retailers that hurts the pockets of Canadians the most.

Canada’s largest grocery retailer, Loblaw Companies Ltd., unveiled Tuesday its record investment plan to expand and relocate 10 stores while kicking off renovations at 700 locations across its banners.

Industry experts shared with Yahoo News Canada that while they welcomed new investments in improving infrastructure and serving Canadians better, it is essential to make note of the role “insufficient competition” among retail giants plays in spiking prices.

“More stores can lead to lower prices, but it depends on the broader food retail landscape in any particular location,” Michael Widener, whose expertise lies in barriers to accessing healthy food and food insecurity in Canada, told Yahoo News Canada.

“For example, if a new Loblaws store sets up near a competitor, it could put pressure on both retailers to offer the best possible deals. But if a new No Frills store opens near a Loblaws – both owned by Loblaw Companies – then there may not be as much of an effect because each store is serving customers with different needs and expectations,” Widener added.

Grocery stores and brand strategy expert David Soberman believes strategic manoeuvres like offering best deals to customers have long been a common practice among Canadian retailers. This means they are willing to compete for an average Canadian customer to pick them over their adversary — but the real worry lies in that other big chains like Walmart and Costco don’t compete with Loblaws “enough,” making the competition insufficient.

“The real point here is whether competing means "A" — offering specials and good deals from time to time or "B" — actually trying to capture the customers of the competitor and to convince them to become regular customers at your supermarket,” Soberman told Yahoo News Canada.

“The problem is that in Canada there is far too much of "A" and not enough of "B". The firms know that "B" will make customers better off and reduce their profits.”

‘We need cheaper food, not more stores’: Aggrieved shoppers slam Loblaw

The grocery retailer may have positioned the latest move as necessary to help out the Canadian economy and create thousands of jobs but disgruntled shoppers already frustrated with the rising prices are not having any of it.

Many Canadians took to X, formerly known as Twitter, to slam Loblaw for the development while raising their concerns over a market that already lacks competition — which in majority opinion is the need of the hour.

Addressing public criticism against Loblaw, Widener told Yahoo News Canada that while keeping the pressure on authorities and retailers is good practice to keep the prices in check, Canadians must not forget there are other factors at play contributing to the overall living standards.

“It’s generally a good thing that pressure is being put on food retailers to keep costs in check, but we also must remember that grocery stores aren’t the whole economy.”

The billions of dollars Loblaw is investing are nice, but bigger solutions that improve labour productivity and decrease housing costs are also part of the equation when it comes to making Canada an affordable and liveable societyMichael Widener, industry expert

All eyes on the much awaited Grocery Retailers’ Code of Conduct

Canadian businesses and experts have their eyes set on the soon-to-be-out Grocery Retailers’ Code of Conduct, the final copy of which is in the last stages of development and is expected to “improve things,” in Soberman’s opinion.

“The big challenge in this sector is the degree to which these firms compete. Perhaps the Grocery Retailers’ Code of Conduct which is in all the headlines right now can improve things,” Soberman shared with Yahoo News Canada.

“But we have been discussing it for months and meanwhile prices continue to rise. I would like to see what it is and after assessing its potential to improve things for it to be put into action ASAP.”

The grocery code of conduct, which is overseen by leaders across government, grocery retail, and food and consumer product manufacturing, aims to promote predictability, transparency, and fair dealing among Canadians and also bring down food prices.

Loblaw Companies Ltd. and Walmart Canada have consistently pushed back against the code, saying it could raise food prices for Canadians significantly, according to a letter sent to The Canadian Press.

Soberman believes as probably the two biggest retailing organizations in Canada, Loblaw and Walmart have the most to lose from greater transparency in their activities.

“They gain from being able to drive harder bargains with manufacturers and also by raising prices on products, as soon as manufacturers announce price increases,” Soberman said.

Much of the inventory sold after an announced price increase was acquired by retailers at the old price. In addition, we are relatively uninformed about the magnitude and levels of listing fees charged by retailers. These also contribute to higher prices for shoppers.David Soberman, industry expert

“My hope is the code will shed greater light on these practices,” Soberman concluded.