‘Shenanigans’: Calls to boycott Loblaws in August grow due to ‘swelling of greed’

As grocery store prices continue to shock Ontarians, some are calling for a boycott of one of Canada’s largest grocery store chains – Loblaws.

Some claim that inflation does not lead to higher prices in groceries, but rather “greedy inflation” or price gouging at the hands of grocers.

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In a tweet on Tuesday, TV personality and author Gail Vaz Oxlade asked others to “join in sending a message to the Loplaus Group that you don’t value their earnings and calling it ‘inflation’.”

“Let’s make it clear that we will not tolerate these scams,” she wrote.

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However, in a statement emailed to Global News, Kathryn Thomas, Vice President of Communications for Loblaw Companies Ltd. “The idea that groceries are profiting from inflation is completely incorrect.”

“We make less than 4 degrees Celsius on every dollar we sell,” the email said. “This was true before inflation and has not changed for many years.”

Thomas said the industry faces “billion-dollar inflationary pressures, including increased costs and supply chain fees.”

“We continue to do everything in our power to ensure that customers find value in our stores,” the email said.

‘So much more than just food’

In an email to Global News, Michelle Waseline, a national spokeswoman for the Canadian Retail Council, said groceries sell “much more than just food.”

She said much of the industry’s growth is “driven by health and beauty sales,” noting that people are returning to work, starting to travel and attending social events again.

“The hierarchy is that health and beauty have higher margins; value-added groceries through overtime (cakes, prepared foods, prepared foods, etc.)

Wasylyshen said that according to Loblaw’s quarterly results, the company’s retail revenue results were $12.045 billion, an increase of $375 million — or 3.1% compared to the first quarter of 2021.

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These results show that the food trade accounted for an increase of 2.1 percent, while the retail drug trade increased by 5.1 percent.

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“Looking at the largest retailers, here’s your adjusted net income metric: $1.9 billion in net income for Loblaw versus $53 billion in sales in 2021, so the profit margin is 3.6 percent,” she wrote.

“Metro had 4.7 percent of net income for the year ($823 million on $18.3 billion) and Sobeys had $746 million on $30.2 billion, for 2.5 percent of net income,” Wasylyshen continued.

These are “all within, or very close to, the grocery industry’s historical benchmarks for profits in the 2.5 percent to 4.5 percent range,” she said.

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Sylvain Charlebois, a professor at Dalhousie University and scientific director at Agri-Food Analytics Lab, told Global News research has shown that there have been no “anomalies” in the past five years indicating “greed inflation” by Canada’s three largest grocers.

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“Over the past five years, we’ve actually looked at the financials of the nation’s Big Three grocers Loblaws, Sobeys, Jupiter and Metro,” he said. We examined ratios, gross margins, and profitability. And there’s no anomaly — I mean, it’s pretty consistent over the past five years.”

The report, co-authored by Samantha Taylor, professor of accounting, Dalhousie University’s Roe School of Business, found that Loblaeus “has reported consistent gross margin and profit ratios since 2017.”

The report notes that the company posted gross profit margins ranging between 29.35% and 31.47% and profits ranging between 1.64% and 3.53%.

“So if there is ‘greedy inflation’ in food distribution, we don’t know where people calling for a boycott are getting their data from, because it’s not, it’s not publicly available,” Charlebois said.

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However, Charlebois said he “cannot be certain” that “greed inflation” does not exist.

“But we can’t really see any evidence that it exists based on the available data,” he said.

Charlebois said he believes the boycott call is a “complete misunderstanding of how food is actually distributed”.

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“Grocers get sharp criticism because consumers can relate to Loblaws a Sobey’s or Metro,” he said. “If there is a problem, it is deeply rooted in the supply chain.”

© 2022 Global News, a division of Corus Entertainment Inc.

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