Loblaw’s Great Canadian Grocery Gouge

Loblaw’s shareholders are laughing all the way to the bank while Canadians struggle to put food on the table. A recent consumer boycott of the grocery giant has sparked a national debate on food affordability and corporate profits.

A Loblaws storefront in Toronto, Canada. (Steve Russell / Toronto Star via Getty Images)

Canada’s largest grocery chain, which has reaped growing profits as grocery prices spiral out of control, has faced a consumer boycott throughout the month of May.

Loblaw Groceries owns and operates more than twenty-four hundred stores across Canada, including its flagship Loblaws grocery stores, discount grocer No Frills, and the country’s largest drugstore chain, Shoppers Drug Mart. The company is involved in banking, via its PC Financial brand, which includes bank accounts and credit cards linked to the company’s in-store rewards system, and deliveries via PC Express.

The bulk of this megacompany’s earnings, however, comes from selling food. Out of CAD $13.6 billion in total revenue the company reported in the first quarter of 2024, $9.4 billion came from food retail, representing 69 percent. Shareholders pocketed $460 million in profit, a 10 percent increase from the first quarter of 2023. Meanwhile, 18 percent of Canadian households face food insecurity.

From 2001 to 2015, a period that overlaps with Transportation Secretary Pete Buttigieg’s work as a McKinsey consultant for the company, Loblaw participated in a scheme with some of its competitors to artificially inflate the price of certain types of bread. The company snitched to the national Competition Bureau in 2015, for which it received immunity from prosecution. Customers, in turn, received $25 gift cards from the company.

Loblaw chairman Galen Weston, scion of Canada’s third-richest family, has become the public face of grocer greed by appearing in the company’s commercials and testifying on its behalf in the Canadian Parliament, dismissing any connection between profit and grocery prices. He’s said the boycott is rooted in “misguided criticism,” which “betrays a misunderstanding of what’s actually driving food prices higher in this country.”

The boycott campaign, organized by members of the r/loblawsisoutofcontrol subreddit, is demanding price caps on certain essential items, a commitment to end price gouging, increased cost transparency, and for the company to sign on to the federal government’s grocers’ code of conduct.

Boycott Victories and Complications

Halfway through May, the boycott earned a minor victory when Loblaw dropped its opposition to the code of conduct. This regulatory half-measure, which strictly addresses grocers’ relations with their suppliers, adopts the faulty market logic that this will necessarily result in a better deal for consumers.

“There’s no doubt when you provide more stability in the marketplace, more costs are reduced, that’s obviously going to have a positive impact on pricing,” Gary Sands of the petit bourgeois Canadian Federation of Independent Groceries told Canadian broadcaster CTV.

This same mystification of market mechanisms underscored Loblaw’s initial objection to the code, with company CFO Richard Dufresne claiming in a letter to parliament that it would “raise food prices for Canadians by more than $1 billion.” These concerns were echoed by a representative of Walmart, which is now the sole holdout on signing the code.

Compliance with the code would make it much more difficult for Weston to blame increasing food prices on suppliers. But that’s about it.

A much more encouraging outcome of the boycott has been increased business for small retailers and co-ops, which offer local, organic, fair trade, and zero-waste products. This shift demonstrates that Canada’s grocery oligopolies aren’t necessary or inevitable.

Not everyone has access, however, to a local independent grocer. For Shawn Chandler, who lives in Wallaceburg, a town of twelve thousand people in southwestern Ontario, his only grocery options are the Loblaw-owned No Frills or Walmart. “I’m not going to spend more just to go to Walmart,” he said in an interview with the Canadian Broadcasting Corporation (CBC). This lack of consumer choice is magnified in northern and remote communities, and First Nations reservations.

Revenge of the Shills

It’s undeniable that, despite its weaknesses, the Loblaw boycott has gotten people talking about the basic injustice of food prices increasing alongside corporate profits, discrediting trickle-down economics in the Canadian public’s eyes. For this reason, the industry’s media shills have worked overtime to sing the praises of Loblaws and its public mascot.

An unsigned editorial in the right-wing National Post, headlined, “Loblaw is a true Canadian success story — no wonder [Justin] Trudeau wants to destroy it,” applauds “captains of industry like Weston,” who are being unfairly maligned for their business acumen.

Dalhousie University academic Sylvain Charlebois, the self-proclaimed “Food Professor” who received a $60,000 research grant from the Weston Foundation in 2018, is, with rare exception, one of Loblaw’s most fervent defenders in Canadian public discourse. For Charlebois, everything but grocer profits are to blame for growing food prices.

Sure, Loblaw is “to blame for certain things,” Charlebois said in an illustrative May 2 CBC interview, “but it’s not towards the consumer, it’s towards the industry.”

“It’s wrong to say Loblaws is unjustifiably increasing its prices, but is Loblaws abusing its power in the supply chain? Absolutely. Same goes for Walmart,” he said. That’s it, the whole story — it’s the supply chain, us plebs just don’t get it.

In a May 4 op-ed for the Toronto Sun tabloid, Charlebois refers to the “alleged anti-Loblaw boycott,” smugly boasting that “there has been no discernible change in customer traffic at Loblaw-owned stores.”

Charlebois, tellingly, calls the code of conduct “essential” for achieving synergy between suppliers and retailers. “This is the real issue the boycott should have highlighted, rather than adopting a populist stance fueled by collective animosity toward a single company and individual — a truly futile and misguided effort,” he wrote, calling the boycott “ineffectual and juvenile.”

How Boycotts Are Like Carbon Taxes

In a column for West-Central Crossroads, an obscure right-wing website, Charlebois claims boycott organizers “are targeting and threatening experts and academics who disagree with their stance and have attacked journalists who report dissenting opinions, exhibiting almost cult-like behavior.”

This rhetoric mirrors similarly baseless claims Charlebois has made about academics who defend carbon taxation, a policy which the Food Professor has also suggested has more to do with raising food prices than profits.

“As soon as one challenges the data used, or methodology, the entire pro-carbon tax mob violently pummels the few individuals who dare to criticize any of the questionable science that supports costly policies for Canadians,” he wrote in an April 2023 Sun column.

Beyond Charlebois’s fantasies of persecution, there’s a more important parallel here. Grocer boycotts, like carbon taxation, are market-based tactics that seek to address collective problems through individual consumer choices. On their own, they’re insufficient, but they point toward more effective, policy-oriented solutions.

Boycotting Loblaw is a good start for raising public consciousness around the connection between consumer prices and profit, but once this month ends, the boycott energy needs to be translated into something larger. A windfall tax on excess profits, which Canada has already introduced for the banking industry, would be a good start in taking on the greedy grocers and climate criminals in one fell swoop.