Grocer code of conduct could help reduce loss of trust in sector

Gaining shoppers trust

A grocer code of conduct is coming to Canada.

The United Kingdom and Australia, where grocer oligopolies exist, have a similar code already. This is great news for consumers. In fact, it should be considered a minor miracle.

It all started in 2020 when Michael Medline, Sobeys’ big boss, told the Empire Club in Toronto that the major stores, including Walmart, Loblaws, Costco, Metro and Sobeys, were abusing their power by introducing all kinds of fees to their suppliers in a brutally random way.

Medline’s announcement sent shock waves through the industry, upsetting the in-group among retailers keen to continue intimidating the rest of the industry. At the time, Eric Laflèche and his team at Metro, for example, told some reporters to ignore this issue and that the industry was fine. Total arrogance.

Now, after just a few years of this, the public sees the major chains as public enemy number one. Our food retailers are accused of abuse and trickery daily.

Grocers have now begun to realize that there might be a problem. Major grocery chains have had a lot of power, maybe too much. The famous dispute between Frito-Lay and Loblaws last year exposed the problem to the public. It was ugly, very ugly.

Marie-Claude Bibeau, the federal agriculture minister, supported by André Lamontagne, Quebec’s agriculture minister, took the lead by creating a working committee to develop a code of conduct for the industry to give Canada’s food processors a chance to be heard. Since then, the project has really become the responsibility of Lamontagne and Quebec. The project will establish a code that will help the industry, but above all, consumers.

The leadership of Lamontagne and MAPAQ clearly compensated for the bewildering inertia of the Ford government in Ontario. The food processing sector in Ontario is the largest part of the manufacturing sector in Canada’s largest province, which makes Ontario’s silence puzzling.

But consumers will also gain in the long run. Many Canadians are unaware that suppliers must pay grocers to do business. While the fee is justified by merchandising costs and shelf space, the types of costs you would expect, things of changed in recent years. Companies like Loblaws, Walmart, and Metro abuse the system, and some levies have been imposed quickly, incidentally, and unilaterally. It is now more difficult in Canada for food processors and independent grocers to compete.

A code of conduct for grocers should change the culture of an industry where vertical co-ordination and collaboration barely exist. It is also about tackling a broken business model. A code can neutralize power relations within the chain, stabilize retail prices, emphasize value and innovation for consumers, improve the security of the domestic food supply, and encourage investment in the agri-food sector. In the U.K., where a grocer code of practice exists since 2010, the country’s food inflation has historically been lower than Canada’s.

It must be understood that the code is not about endorsing a police state or some attempt to nationalize our food distribution. The spirit of the code is to establish greater discipline and eliminate breaches of trust, which is exactly what we have now. Many supply chain relationships are dysfunctional, while public trust is at an all-time low.

The governance around the code will also allow for greater transparency, something we sorely lack at present. A secretariat will be created to enable industry to be accountable to itself and the public.

For some time now, with an inflation rate that has reached record levels, consumers have been increasingly frustrated, fed up, and downright deprived at the grocery store. We want to better understand the mechanics behind pricing. Now, we’re left to guess at just about everything. Consumers do not feel informed or protected.

The code will surely help in these respects. The code will also help independent grocers who deserve a chance to compete against the bigger retailers. Innovation, variety, and food congruity for all of us often go through the independents.

But it is a voluntary, government-coordinated and industry-led code. Compliance and consumer trust will be significant challenges, especially for now. Time will tell if the code will be effective.

The irony in all of this is that, in the beginning, it was food manufacturers who wanted a code. Now, knowing that they are facing a crisis of confidence, grocers themselves need the code, more than ever.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


We all pay for grocery store theft

Combating theft from stores

Grocery theft has always been a major problem, but with food inflation as it is, shopkeepers now fear the wrongdoers more than before.

In December, some Ontarians visited stores in Trois-Rivières, Que. to steal $4,000 worth of meat. In Sherbrooke, Que. a man was arrested following a shoplifting incident a few days before Christmas, and two other people are still on the loose. They stole more than $2,000 worth of groceries.

Since they got caught, these thefts were probably perpetrated by amateurs, who may have been already doing this for a while. The volume and the amounts tell us, though, that they were targeting a resale market, likely in the food service industry.

These two cases are obviously known due to media coverage. But most such incidents are handled by store management. Cases of grocery store theft are grossly under-reported, and obtaining food theft data is extremely challenging.

Most thefts are in-store, off-the-shelf, of only a few products and usually driven by desperation, negligence, or a mixture of both. But the most troublesome and financially damaging incidents for grocers are those carried out by internal employees. Those cases rarely make headlines due to their sensitive nature, as the optics can be embarrassing. Volume and valuation for these cases are usually more important.

Theft, in general, in food retail is taboo. But with the food inflation rate exceeding the prevailing inflation rate for more than a year now, the industry realizes that its theft problem is worse than before.

According to some industry data, an average-sized food retail store in Canada can have between $2,000 and $5,000 worth of groceries stolen every week. With the relatively narrow profit margins in grocery, this amount is huge.

To cover losses, grocers need to raise prices, so in the end, we all pay for grocery theft.

Some stores are increasing security to prevent theft these days. There are certainly security guards at the entrance, but there is also more security in the form of personnel dressed in civilian clothes, patrolling the stores all day pretending to do their shopping. It’s a discreet tactic but one that is very effective.

Elsewhere in the world, certain methods are much more visible. Some stores in the United States, Europe and elsewhere have even installed anti-theft alarms directly on certain products, especially on meat cuts, cheese, and confectionery.

No merchant has done the same thing in Canada, at least not yet. But don’t be surprised if you see these devices here in Canada at some point. Also, you can expect more cameras, more surveillance and more security in general, as your favourite grocer won’t have a choice.

The other challenge facing grocers is self-checkouts. In a recent survey by our lab, more than 65 per cent of consumers now prefer to use a self-checkout with an order of fewer than 20 items. They are increasingly popular. But monitoring at the point of service is challenging: the technology is still not yet ready to limit theft.

Limiting labour and handling required by the consumer at the exit during the self-checkout process is not easy. Using the smart cart, which calculates everything automatically, or a giant black box in which we put all our products at checkout and calculate everything in a few seconds can help. Canada, though, is still not there.

The world’s first self-service supermarket, the Piggly Wiggly, opened in Memphis in 1916. Customers were allowed to visit the aisles on their own. Like today, a customer would receive a basket and choose from the various items they wanted. That was 107 years ago, and, back then, the greatest fear was also theft.

The more things change, the more they stay the same.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Announcing corporate bonuses requires tact and empathy

Grocery executives' pay

With a new year starting, we hear announcements about bonuses in food retailing.

(Grocery store chain) Metro recently announced it offered five top senior executives $3.7 million in bonuses. That represents a four per cent increase in bonus payouts over the previous year, while Metro sales grew 3.3 per cent over the past fiscal year.

Unsurprisingly, Éric La Flèche, its CEO, saw his total compensation reach $5.4 million, up seven per cent compared to 2021. His annual bonus this year is around $1.5 million, an increase of 14 per cent compared to last year.

Alas, Metro’s statement said nothing about the compensation paid to other company employees.

Metro is not alone. Other grocers and other companies in the food sector have done the same thing. In 2021, according to Globe and Mail data, José Cil of Restaurants Brand International, Brian Hannasch of Alimentation Couche-Tard, Galen Weston of Loblaws and George Weston, Neil Rossy of Dollarama, and Michael Medline of Empire/Sobeys, all working in the food sector, have, without exception, received larger bonuses than those announced by Metro.

There is nothing wrong with paying bonuses to executives who help a company grow and create value for its shareholders and customers. In fact, other than José Cil of Restaurants Brands International, who ranks 13th, again according to the Globe and Mail, there is no food CEO whose compensation ranks among the top 20 in the country. Galen Weston of Loblaws is in 42nd place, Michel Medline in 61st and Éric La Flèche in 78th. Nothing exceptional. In food, the margins are thin and the salaries are too.

Motivating leaders and attracting the talent needed to get things done remains an asset, especially these days. But in the food sector, companies must read the proverbial room, considering what’s happening with our economy. Profits in the food industry have an incredibly sensitive moral undertone; Consumers have a very different perception of bonuses because it is, above all, a question of social acceptability.

Most often, performance reviews of corporate leaders are heavily influenced by the company’s sales figures. Like everywhere else, inflation has inflated the numbers in the financial statements. Moreover, food inflation in the country has exceeded 10 per cent for several months and greatly exceeds the general inflation rate.

Major grocers have continually been criticized by politicians, analysts, and even journalists for their so-called record profits. The big food companies have been posting very good results for some time; that goes without saying.

But food inflation in Canada remains one of the lowest in the world among industrialized countries. Amongst industrialized economies, only Japan, China and India show lower rates than Canada. Since the food sector manages a global phenomenon, it is unwise to point the finger at supermarkets as their profit margins have never really exceeded the profitability thresholds that we see elsewhere, including in the United States.

So, for Metro and the others, announcing bonuses requires tact, and above all, empathy. Announcing bonuses to just a handful of executives during the holidays is simply ill-timed. The company could increase executive salaries to avoid bonuses and avoid any public outcry. If that’s not possible, there are other ways to go about it.

With these bonus announcements, the companies should publicize the steps taken to compensate other employees: all staff, not just executives. People don’t know much about Éric La Flèche, but they know Samantha, Nicole, Vincent, and others who work in stores we all visit. And they work long hours. Perhaps more than ever, it is critical to humanize food companies to demonstrate that employees occupy an important place when evaluating a company’s financial performance.

In addition, these companies give generously to food banks and support various causes throughout the year. When announcing targeted bonuses, the company should also display its charitable donations and shed light on its socioeconomic contributions. Again, recognizable and public empathy.

Grocers must come to terms with the fact that they are experiencing a real crisis of confidence across Canada. Their image depends on every word written in press releases and every sentence spoken in front of a microphone or a camera. Their relationship with the public changed in 2022, and much the same should be expected in 2023.

Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


Pharmacist’s tips on preventing illness this winter

Fending off illness

The past two years have been fraught with talk of viruses and vaccines.

Between COVID-19 and the flu, there has not only been a lot of conversation around the concerns of getting ill, but also around the best ways we can protect ourselves and our loved ones. It’s important we take any precautions we can to prevent the spread of flu and COVID-19 this winter. As a pharmacist, I’m sharing a few tips for preventing illness.

• Protect yourself from COVID-19. You can get a flu shot and a COVID-19 vaccine or booster in the same sitting for twice the convenience. As per current NACI guidelines, it is safe to get both vaccines during one appointment, making it easy to protect yourself against both viruses at the same time.

According to Health Canada, for best protection against COVID-19, it's important to stay up to date with recommended COVID-19 vaccinations and boosters, even if you’ve been previously infected with COVID-19.

According to the Government of Canada, if your last dose was more than nine months ago, you are no longer considered adequately vaccinated. If you have any questions regarding vaccines, make sure to speak to a healthcare practitioner, like your local pharmacist or family physician.

To book an appointment, register with the provincial Get Vaccination system at www.getvaccinated.gov.bc.ca/s/.

• Keep your hands clean. Washing your hands frequently and thoroughly is one of the most effective ways to reduce the spread of infections and germs.

Keeping hand sanitizer handy for moments when soap and water aren’t on-hand is a great back up option. Having alcohol-based hand cleansers as a backup, whether in your bag, at your desk or in your car, can help to protect yourself and others from germs.

• Wear your mask. Wearing a mask covering your nose and mouth is a simple yet effective way to block the spread of germs, particularly in enclosed public spaces. If you are looking for extra protection, give yourself peace of mind and wear your mask.

Due to of lack of exposure to (seasonal) illness in recent years, it is important we take the steps to protect ourselves and our loved ones this season.

Be sure to visit your local pharmacy to get your flu shot and your COVID-19 vaccine— it’s our best shot at protecting our communities this season.

Nathan Klaassen is a pharmacist and owner of your local Shoppers Drug Mart in Kelowna. Visit ShoppersDrugMart.ca to find your nearest store.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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