Report on grocery store competition reveals about profit margins

What a highly anticipated report on grocery store competition reveals about profit margins, barriers

https://www.ctvnews.ca/politics/what-a-highly-anticipated-report-on-grocery-store-competition-reveals-about-profit-margins-barriers-1.6458050?

By Spencer Van Dyk  CTV News Parliamentary Bureau Writer,  June 27, 2023

關於雜貨店競賽的備受期待的報告揭示了利潤率，障礙

Spencer Van Dyk CTV新聞議會局作家，2023年6月27日

加拿大競爭局呼籲各級政府促進雜貨行業的競爭，以降低購物者的價格。該獨立機構去年10月啟動了對加拿大零售雜貨市場的研究，並在周二發布的報告中向政府提出了一些建議，以鼓勵該行業競爭。

即，競爭局建議加拿大製定一項策略，以促進新型的雜貨業務，例如在線雜貨店，鼓勵獨立和國際雜貨店進入加拿大市場，介紹單位定價要求，並采取措施限製限製財產控製的措施 行業。

報告指出：“加拿大的雜貨業集中。” “對於中小型企業來說，很難與加拿大的雜貨巨頭有效競爭。 對於新企業來說，成功進入該行業也是一項挑戰。”它也寫道：“沒有競爭環境的變化，加拿大人將無法從競爭價格和產品選擇中完全受益。”

這項考試是在政治上對雜貨成本不斷上升的關注之中的提高。 10月，下議院一致通過了一項新民主黨動議，呼籲聯邦政府采取措施來應對“貪婪”，包括要求競爭局調查雜貨連鎖利潤。

這是報告的關鍵收獲和建議。增長到邊緣開始大流行
據加拿大三個最大的雜貨店（Loblaw，Sobeys and Metro）稱，去年的競爭局匯總了超過1000億美元的銷售額，並獲得了超過36億美元的利潤。

競爭局競賽促銷分部副專員安東尼·杜羅謝（Anthony Durocher）說：“這項研究是在一個重要的時候。” 越來越合並。

“我們不是為了回應任何特定的不法行為指控，而是確定競爭問題是否可能導致雜貨價格上漲，以及政府是否可以采取一些措施來改善競爭，以幫助控製雜貨的增加 價格，” Durocher還說。

競爭局的報告同時，雜貨店巨頭的利潤率（而不是整體上漲或公司的利潤上漲），以表明需要更多的競爭。

為此，該報告的一個關鍵發現是，自2017年以來，該國最大的雜貨商食品毛利率增加了大約一個或兩個百分點，因此，在“ covid-the-covid- 19）流行和當前的通貨膨脹期。”

該利潤率大致相當於每花100美元用於食品雜貨的額外$ 1-2，並且根據報告，“雜貨店在每個物品上的收益都相對較少，但數量的利潤很少。”

購物者需要更多的價格比較信息
競爭局作為報告的一部分呼籲省級和地區政府介紹有關單位定價信息的規則，因此購物者可以就在哪裏找到最佳交易做出更明智的決定。

單位定價顯示，除了產品的總成本外，標準包裝尺寸的價格，例如，每100毫升橙汁的成本。

雖然加拿大的許多地方已經顯示出他們的單位定價，但在魁北克的法律上隻需要。 新西蘭，澳大利亞和英國都實施了單位定價法規，這些規定有助於消費者比較成本。

該報告建議省和地區政府共同努力，在全國範圍內製定一致的單位定價規則。

報告指出：“當消費者知道從哪裏獲得最佳交易時，競爭最有效。”

更獨立的國際雜貨店需要
該報告還呼籲政府鼓勵獨立和國際雜貨店進入加拿大市場，並為他們提供現有的“重大障礙”。

報告指出：“獨立人士在加拿大各地的社區中發揮了重要作用，但是如果沒有政府的支持，我們不應該期望他們在不久的將來會大大擴展。”

它也指出：“新競爭對手的進入和現有獨立人士的增長將增加競爭，增強消費者的能力，並推動企業降低價格，提高產品質量和創新。”

許多獨立的雜貨店，雅氣

The Competition Bureau of Canada is calling on all levels of government to boost competition in the grocery industry, in a bid to lower prices for shoppers.

The independent agency launched its study of Canada’s retail grocery market last October, and in its report, published Tuesday, made several recommendations to government to encourage competition in the industry.

Namely, the Competition Bureau is recommending that Canada develop a strategy to promote new types of grocery businesses, such as online grocers, encourage independent and international grocers to enter the Canadian market, introduce unit pricing requirements, and take measures to limit property controls in the industry.

“Canada’s grocery industry is concentrated,” the report states. “It can be difficult for small and medium-sized businesses to compete effectively against Canada’s grocery giants. It is also challenging for new businesses to enter the industry successfully.”

RELATED STORIES

• Rising grocer profit margins underscore need for competition, regulator finds
• Grocery CEOs deny accusations that food price inflation is driven by profit-mongering
• House committee recommends windfall tax for grocers if Competition Bureau finds evidence of profiteering
• Canada's grocery sector coming under scrutiny by Competition Bureau
• Food inflation: How Canada's grocery prices compares to other nations

RELATED LINKS

• Competition Bureau Retail Grocery Market Study Report

“Without changes in the competitive landscape, Canadians will not be able to fully benefit from competitive prices and product choices,” it also reads.

The examination comes amid heightened political attention on the rising cost of groceries. In October, the House of Commons unanimously passed an NDP motion calling on the federal government to take steps to tackle "greedflation," including asking the competition bureau to investigate grocery chain profits.

Here are the key takeaways and recommendations from the report.

INCREASES TO MARGINS STARTED PRE-PANDEMIC

According to the Competition Bureau, Canada’s three largest grocers — Loblaw, Sobeys and Metro — last year collectively reported more than $100 billion in sales and earned more than $3.6 billion in profits.

“This study came at an important time,” said Anthony Durocher, deputy commissioner of the competition promotion branch at the Competition Bureau, who added grocery prices have been increasing at their fastest rate in more than 40 years, while the retail grocery industry has become increasingly consolidated.

“We undertook this study not in response to any specific allegations of wrongdoing, but to determine whether competition issues could be contributing to rising grocery prices, and whether there are steps that governments can take to improve competition as a way to help rein in rising grocery prices,” Durocher also said.

The Competition Bureau report meanwhile points to the grocery giants’ margins — as opposed to the cost of food, which is rising overall, or the companies’ profits — as an indicator that there is a need for more competition.

To that end, a key finding of the report is that the country’s largest grocers’ food gross margins have increased by about one or two percentage points since 2017, so the increases started three years before the “supply chain disruptions faced during the (COVID-19) pandemic and the current inflationary period.”

That margin is roughly equivalent to an additional $1-2 for each $100 spent on groceries, and according to the report, “grocers make relatively little on each item, but make their profits in volume.”

SHOPPERS NEED MORE PRICE COMPARISON INFORMATION

The Competition Bureau as part of its report is calling on the provincial and territorial governments to introduce rules around unit pricing information, so shoppers can make more informed decisions about where to find the best deals.

Unit pricing shows, in addition to the total cost of a product, the price for a standard package size, for example, the cost per 100 millilitres of orange juice.

While many places in Canada already display their unit pricing, it is only legally required in Quebec. New Zealand, Australia, and the U.K. have all implemented forms unit pricing regulations, which help consumers compare costs.

The report recommends provincial and territorial governments work together to put in place consistent unit pricing rules across the country.

“Competition works best when consumers know where to get the best deals,” the report states.

MORE INDEPENDENT, INTERNATIONAL GROCERS NEEDED

The report also calls on governments to encourage independent and international grocers to enter the Canadian market, and lays out the existing “significant barriers” for them in doing so.

“Independents play an important role in communities across Canada, but without government support, we should not expect them to significantly expand in the near future,” the report states.

“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,” it also states.

Many independent grocers, according to the Competition Bureau, must buy groceries wholesale from their competitors because they are not large enough to have their own warehouses, and they are concerned about then being bought out by a larger chain, among other challenges.

Canada’s size and low population density also add to the challenge of building a network, while the country’s largest grocers operate thousands of stores and have an existing robust network.

“Despite these challenges, we are of the view that attracting new grocers to the Canadian market is one of the key levers governments have to help bring about lower prices and greater choices for Canadians,” Durocher said.

With files from CTVNews.ca Senior Digital Parliamentary Reporter Rachel Aiello