What the grocery report recommends to improve competition

Here are the Competition Bureau's recommendations for the sector
6/27/2023
food inflation illustration

Canada's competition watchdog released its much awaited study into the country's retail grocery market on Tuesday (June 27).

Here are the Competition Bureau's recommendations for the sector, in its own words:

Recommendation One

Canada needs a Grocery Innovation Strategy aimed at supporting the emergence of new types of grocery businesses and expanding consumer choice.

There are new businesses that want to disrupt how the industry works, including by selling groceries to Canadians online.

Governments at all levels should work together to encourage the emergence of new types of grocery businesses that are willing to take risks to shake things up.

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

Recommendation Two

Federal, provincial and territorial support for the Canadian grocery industry should encourage the growth of independent grocers and the entry of international grocers into the Canadian market.

There are a number of important independent grocers across Canada who already compete against Canada's grocery giants. However, given their relative scale, they face real challenges growing into national competitors.

To encourage more competition in the industry, governments should implement policies that support the growth of independents, as well as the entry of international and discount grocers.

The entry of new competitors and growth of existing independents would increase competition, empower consumers and drive businesses to lower prices, improve product quality and innovate.

Recommendation Three

Provincial and territorial governments should consider introducing accessible and harmonized unit pricing requirements. It is difficult to compare prices on even a few items between different grocery stores.

Canadians need tools to help them compare grocery prices and empower them to make informed purchasing decisions. This information is key to shop better and shop smarter, and to encourage more competition in the industry.

To achieve these goals, provincial and territorial governments should consider working together to develop and implement accessible and harmonized unit pricing requirements.

READ: Standing Committee on Agriculture and Agri-Food releases report on food inflation

Recommendation Four

Provincial and territorial governments should take measures to limit property controls in the grocery industry, which could include banning their use.

Property controls limit how real estate can be used by competing grocers. They make it difficult, or even impossible, for new grocery stores to open, which reduces competition in communities.

In a statement to Canadian Grocer, Retail Council of Canada spokesperson Michelle Wasylyshen said: "Retail Council of Canada is happy to see that the Competition Bureau Retail Grocery Market Study Report did not make any finding that grocery profits have been excessive or that grocers have padded margins during this inflationary period. The Canadian grocery market has always welcomed competition. There are no barriers that grocers themselves impose to new entrants wishing to get into the market. Many hold off because they see how aggressively grocers compete on price and because Canada already has a well-established discount grocer market share. And so, the conclusion that we draw from the report is something of a paradox: more competition could result in lower prices, but foreign grocers aren’t raising their hands to enter our market because Canadian grocers already compete fiercely on price."

Gary Sands, senior vice president, public policy and advocacy, for the Canadian Federation of Independent Grocers (CFIG) said he found the report "very encouraging."

"We applaud the recommendation to develop a whole-of-government strategy to support our grocery industry and in particular, the need to provide better support for Canada’s independent grocers. As well, the issue of property controls through restrictive covenants was raised by CFIG and to my knowledge, we were the only ones who brought that issue forward. So the bureau recognizing that action needs to be taken to curb abuse of restrictive covenants is very welcome. I also think it is very encouraging that the Competition Bureau raised the importance of the Grocery Code of Conduct because that sends a clear signal to the entire industry, that we need to get behind that code and make it work."

With files from Canadian Grocer staff

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