Canadians have only a few grocery giants from which to choose and that lack of competition means higher prices, lower product quality, and less choice, according to a new report by the Canadian Competition Bureau.
“The price Canadians pay for groceries has been rising fast,” the report notes. “So what is the solution? In our view, Canada needs more grocery competition.”
RecommendationsThe report is based on a study launched in October 2022, which examined the level of competition in the grocery industry. It makes several recommendations to the government.
It suggests that Canada needs a strategy to support new types of grocery businesses and expand consumer choice, which could include selling groceries to Canadians online.
It also suggests that governments implement policies that encourage the growth of independent grocers and the entry of international and discount stores into the Canadian market.
“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,” says the report.
It calls on provinces and Ottawa to introduce accessible and harmonized unit pricing rules.
“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,” the report said.
Finally, the report suggests that provincial and territorial governments should limit property controls in the grocery industry, possibly even 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.”
Unlike grocery giants Loblaws and Sobeys, which have stores across the country, grocer Metro operates only in Ontario and Quebec. But all three companies have over 1,000 stores each, including franchised locations.
Costco and Walmart are the next largest grocers, but only have about 500 stores between them.
Save-On is an independent chain of grocery stores, operating more than 175 locations in Western Canada, and serves 23 percent of B.C.'s grocery shoppers, the report states, but adds, “Even the biggest independents face challenges trying to compete against the grocery giants.”
The Competition Bureau is an independent law enforcement agency and investigative body that promotes and protects competition for Canadian consumers and businesses.