Canada needs more competition in the grocery market, Watchdog says

Canadians only have a few supermarket giants to choose from, and that lack of competition means higher prices, lower product quality and less choice, according to a new report from the Canadian Competition Bureau.

The Federal Ministry has published a survey of the grocery market report“Canada needs more food competition,” on June 27, stating that food prices in the country have risen at their fastest rate in more than 40 years.

“Canadians are feeling the pinch,” the Competition Bureau said in an accompanying document press release.

“The price Canadians pay for groceries has risen rapidly,” the report notes. “So what’s the solution? In our opinion, Canada needs more competition in supermarkets.”

“Most Canadians buy groceries from stores owned by a handful of grocery giants. In 2022, Canada’s three largest grocers – Loblaws, Sobeys and Metro – collectively reported more than $100 billion in sales and earned more than $3.6 billion in profits.

Recommendations

The report is based on a study launched in October 2022 that examined the level of competition in the food industry. It makes a number of recommendations to the government.

It suggests that Canada needs a strategy to support new types of grocery stores and expand consumer choice, including the online sale of groceries to Canadians.

It also suggests that governments are pursuing 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 the growth of existing independents would increase competition, empower consumers and drive companies to lower prices, improve product quality and innovate,” the report said.

It calls on the provinces and Ottawa to introduce accessible and harmonized unit pricing rules.

“It is difficult to compare the prices of even a few items between different supermarkets. Canadians need tools to compare food prices and enable them to make informed purchasing decisions,” the report said.

Finally, the report suggests that provincial and territorial governments should limit property controls in the food industry, and possibly even ban their use.

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

Unlike supermarket giants Loblaws and Sobeys, which have stores across the country, grocery store Metro only operates in Ontario and Quebec. But all three companies each have more than 1,000 stores, including franchise locations.

Costco and Walmart are the next largest grocers, but together only have about 500 stores.

Save-On is an independent supermarket chain with more than 175 locations in Western Canada and serving 23 percent of consumers in British Columbia, the report states, but adds: .”

According to the Canadian Federation of Independent Grocers, there are approximately 6,900 independent supermarkets in Canada. Many of them are family-run, single-store businesses, with limited space and less variety than stores operated by the giants.

The Competition Bureau is an independent law enforcement and investigative body that promotes and protects competition for Canadian consumers and businesses.