Confusion over drivers of food inflation creating consumer distrust of grocers: Experts

Canadians kept attuned to the parliamentary committee hearings last month on soaring food prices in surprisingly strong numbers, reveals a new survey from consumer data and insights firm Caddle Inc. 

The bad news: despite testimony from grocery CEOs to the contrary, many shoppers still think the big chains are using their combined market penetration to gouge customers. In fact, 68% of Canadians want the government to intervene on grocery costs.

The House of Commons hearings on March 8 and 9 summoned the chief executives of Loblaw, Metro and Empire to explain why Canadians are facing the worst retail food inflation in more than four decades, even as profits for their companies soared, year-over-year, by tens of millions of dollars. (Walmart's CEO appeared before MPs on March 27, while Costco's Pierre Riel spoke before the committee on April 17.)

In a nationally representative sample of Canadians surveyed on March 25 and 26, over one third (35%) said they followed the hearings. A further 55% were aware of them. 

READ: Transparency key to rebuilding trust between grocers and consumers

However, when they were asked if the leaders of the grocery chains were transparent and forthcoming when speaking before lawmakers, 58% of Canadians said “no.” Only 24% said “yes.” 

Furthermore, half of respondents said the defense the grocery leaders provided during the hearings were “not at all” or “not very” convincing. Only 33% said they were at least “somewhat convincing,” with 15% saying “very convincing.” 

The survey results were shared during a webinar Tuesday (April 25), Consumer Trust – The Grocery Channel Edition, hosted by Colleen Martin, chief revenue officer at Caddle, and Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. 

Charlebois noted the hearings in Ottawa were followed by not just boomers (38%) and millennials (33%), but also gen X (37%) and gen Z (28%). 

“This topic is interesting for everyone,” he said. “I thought the younger generations wouldn’t have been as involved or as engaged with what is going on in parliament. So, it’s actually quite refreshing – I see it as a good thing.” 

But when it came to how the public perceives Canada’s grocery chains, it wasn’t positive.

“There seems to be a lot of frustration and resentment, and growing rage,” said Martin, pointing to what is happening on TikTok. “People [are] posting videos of themselves stealing from grocers because they think that they’re the ones being gouged.” 

READ: We all pay for grocery theft

Asked to identify the “main reason” for rising food prices, 30% of Canadians agreed “grocery chain price gouging” – the same percentage who said “inflation.” Only 14% said “Covid’s impact on the economy.” Just 7% said “government raising interest rates” or the “global shipping crisis.” 

Charlebois said, in truth, rising food costs at retail have to do with things like increased commodity prices and supply chain issues. But he said it’s clear shoppers aren’t reacting based on facts or figures.

“They are allowing their emotions and parts of the supply chain that they do understand to really drive their opinion,” he explained. “And so I feel for execs. They showed up, which is great, and did the best they could given the audience was really against them.” 

In terms of the narratives the three chains communicated during the hearing, Charlebois and Martin gave kudos to Michael Medline, the CEO of Empire, operator of the brands Sobeys, Foodland, FreshCo and IGA. 

“He had an action plan in terms of bringing prices down,” says Martin, while Charlebois noted, “he came out as very authentic. [Loblaw CEO] Galen Weston did very well, too.” 

Loblaw, including its chains No Frills, Real Canadian Superstore, Atlantic Superstore and Zehrs, was seen as the grocery chain “doing the most to help Canadians save in these inflammatory times” (18% of Canadians), ahead of Walmart and Costco, both at 12%.

Almost half of Canadians (47%) said they would like to see “more price freezes” from the grocery chains, while 44% want “more transparency related to food sales.” A further 36% said “loyalty programs should be more generous.”