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Home Business Loblaw’s decision to freeze prices on all No Name items until January labeled a ‘PR strategy

Loblaw’s decision to freeze prices on all No Name items until January labeled a ‘PR strategy

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Canada’s largest grocery chain freezes prices on all No Name products for the next three months.

Loblaw Companies Ltd., which operates grocery stores including Loblaws, Zehrs, No Frills and Real Canadian Superstore, said it has fixed prices on popular house brands including over 1,500 groceries through January 31, 2023. I’m here.

Loblaw chairman and president Galen G. Weston said in a letter to some customers on Monday that the average price of a basket of groceries has increased by about 10% this year, with items like apples, soup and potato chips increasing. said to have risen further. .

Weston said many of these were “crazy” out of the company’s control, as food suppliers passed higher costs onto Rob Lowe.

While chains are pushing against some price hikes where possible, suppliers are facing the same rising costs faced by consumers.

In a letter to members of the company’s loyalty program, PC Optimum, Weston wrote, “If you’re worried about your family’s budget and don’t know how much you’ll need for food each month, none of these explanations are very comforting. not.

Last year, the company temporarily suspended sales of Frito-Lay products in its stores before the two companies could reach an agreement due to a fight over price increases.

Grocery chains have come under criticism for being seen as making excessive profits at a time when rising inflation has left consumers lean.

A few years ago, grocery chains such as Loblaw, Sobeys and Metro were found to have colluded for years to adjust the prices of bread and other baked goods by a Canadian competition watchdog. It took a toll on shopper reputation.

Federal NDP leader Jagmeet Singh called for grocery store profits, noting that the major Canadian chains have made $2.3 billion in profits so far this year.

Loblaw’s profits have actually increased recently, the company reveals Last quarter net income of $387 millionThat’s $12 million since this time last year, The same period in 2019, before the COVID-19 pandemic.

Rival Metro Inc., which owns brands such as Metro and Food Basics, had net income of $275 million. most recent quarterup from $252 million a year ago and $222 million in the same period in 2019.

The same is true for Empire Co., which owns grocery brands such as Sobeys, IGA, Safeway, Farm Boy, Foodland and FreshCo. Net income of $187 million In the most recently completed quarter. decreased slightly from $188 million in the same period of the year from before $120 million in the same period before the pandemic.

Loblaws is spinning this move as a change to help consumers, but it’s common for grocers to try to maintain stable prices during the busy holiday shopping season.

“It is industry practice to freeze prices on all private and national branded groceries from November 1 through February 5,” a Metrochain spokesperson told CBC News on Monday. “And this is true for all Metro banners this year as well.

“There will be some price increases prior to October 31st that may show up on the shelves, but no price increases after that.”

many skeptics

Jim Stanford, an economist and director of the Center for Future Work, a research institute, said many Canadian companies are trying to pose themselves as victims of inflation, but their financial results suggest that they are actually not. shows that it contributes to

“Corporate profits have surged alongside consumer prices, and it’s no coincidence,” he told CBC News in an interview Monday. is clear.”

As a percentage of Canada’s overall GDP, he noted corporate profits hit an all-time high of almost 20% in the second quarter of this year. Profits are rising at a faster pace in other sectors, particularly the energy sector, Stanford said, but grocery stores are clearly ahead.

Of Loblaw’s decision to freeze No Name’s price, “we should see this as a PR gesture from a company that knows it’s getting attention right now.”

Watch | Why is Loblaws making this move now?

They were able to do this for everything they sold.

Jim Stanford, an economist and director of the Center for Future Work, said Rob Rose’s move to freeze prices on No-Name products is “perfect confirmation” of what is already known about the supermarket business. said. It is an oligopoly.

Some say it’s unfair to suggest that grocery chains in particular have preyed on consumers. He said he didn’t see much evidence of unfair advantage in the market.

“Profit levels are rising not because of higher prices, but because of sales volume,” he said in an interview.

“The increase in earnings that we are seeing is largely due to higher commodity prices and especially higher prices for energy, oil and gas. So that is causing both higher inflation and higher earnings. increase.”

Marion Chan, principal at TrendSpotter consultancy, said the move made sense for Loblaw. Because it’s an opportunity to win customers over items where price tends to be more important than branding.

Consumers fed up with inflation are “very willing to make trade-offs and go for no-name or private-label products to save some money,” she said in an interview. People are loyal to brands for a variety of reasons, [they] No, I hit a cap at a certain point they say I just can’t use. ”

Watch | Are Grocery Giants Preying On Us?

Are grocery giants preying on us?

Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, said that while the costs of the big grocery chains have justifiably increased, the industry as a whole is currently experiencing a large outpouring of consumer outflows in response to rising food prices. He says it draws heat.

Similar movements in other countries

Loblaw’s decision to freeze prices on the private label, which features yellow and black packaging, follows similar announcements by grocers in other countries.

In August, French supermarket chain Carrefour announced plans to freeze prices on about 100 of its own brand products until November 30.

In June, Lidl’s U.S. division launched a summer price-cutting campaign to ease the burden of inflation on customers. By August, he had reduced prices on more than 100 items in nine East Coast states, according to the company.

Sylvain Charlevoix, a professor of food distribution and food policy at Dalhousie University in Halifax, said, “For some time now, we’ve seen grocers voluntarily freeze prices across the G7. “It should have happened in Canada a long time ago.”

Still, freezing prices on No Name would provide much-needed reassurance for Canadians, he said, and would help fix some of the image problems facing Canada’s big grocery store. He added that it is also useful for

“It’s also a PR strategy….a lot of Canadians are blaming the grocery store for what’s going on with food inflation,” he said. …but much of that criticism is unfair, as food prices can rise for a variety of reasons beyond the control of grocers.”

Mike von Massau, an associate professor in the Department of Food, Agriculture and Resource Economics at the University of Guelph, said it was no coincidence that Roblow decided to limit price increases for its owned brands. of the supply chain.

“They can control the brand and have more control over the margins on that product, and they may have locked in prices and mitigated future risk considerably,” he said in an interview. “Now, with this commitment, are they going to lose a good amount of money? Probably not.”

The company’s move has a lot to do with public relations, but it’s likely to help those most in need because it targets staple products that have little way of avoiding price increases. It could continue to rise and this gives people some certainty,” he said.

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