[Canada] Canadian Politics Redux

[Josephus]

It's hard to say, though, how much of that increase is food-related. Most big grocery chains carry a lot more than groceries. Loblaws for instance sells all sorts of stuff from toys to books to household decorations. I'm sure the margin on that stuff is more than groceries, but that gets included in their annual profits.

[crazy canuck]

The Libs and NDP like to blame greedy profit taking by corporations.  But there is next to no evidence to support the theory that margins have increased.

Actually, in the case of grocery stores, their profit margins increased by about 1-2% since 2017.

Right, but remember the theory of the Libs and the NDP is to explain the recent price increases and they blame greedy grocers increasing their margins.  But that is not what happened.  Their margins have been steady.  An increase of 1%  over the last 6 years speaks more to their operations becoming ever so slight increase that speaks as much to the efficiencies that have occurred over time than anything.  And an increase of margins that is so small over 6 years really makes the point that this is really a volume business not a margin business. 

Their increased profits were because more people were buying more things that have a low margin.

Also, its a bit laughable to suggest, as the government now does, that there is limited competition in the grocery sector.  It is one of the most competitive businesses going because profits depend on volume.  They all need to find a way to get the consumer to  purchase from them.  They are not competing on price (unless they use lost leaders) because their margins are already so thin. 

[crazy canuck]

It's hard to say, though, how much of that increase is food-related. Most big grocery chains carry a lot more than groceries. Loblaws for instance sells all sorts of stuff from toys to books to household decorations. I'm sure the margin on that stuff is more than groceries, but that gets included in their annual profits.

The toys and books are higher margin items, but low volume.  My bet is they provide a bit of a bump to the overall margin, but most of the increase is going to be them keeping their costs under control to try to eek out that 1% over six years improvement on margin.

[viper37]

Also, its a bit laughable to suggest, as the government now does, that there is limited competition in the grocery sector.  It is one of the most competitive businesses going because profits depend on volume.  They all need to find a way to get the consumer to  purchase from them.  They are not competing on price (unless they use lost leaders) because their margins are already so thin. 

There is limited competition because the government allowed it to become this way.  There's only 3 grocery chains in Canada.  Walmart doesn't make a dent, their Sam's Club never made much noise.  Costco is popular, but not enough to be threatening.

The margins are thin on groceries, but they are conglomerates involved in much more than groceries.

[crazy canuck]

Also, its a bit laughable to suggest, as the government now does, that there is limited competition in the grocery sector.  It is one of the most competitive businesses going because profits depend on volume.  They all need to find a way to get the consumer to  purchase from them.  They are not competing on price (unless they use lost leaders) because their margins are already so thin. 

There is limited competition because the government allowed it to become this way.  There's only 3 grocery chains in Canada.  Walmart doesn't make a dent, their Sam's Club never made much noise.  Costco is popular, but not enough to be threatening.

The margins are thin on groceries, but they are conglomerates involved in much more than groceries.

Really, only three grocery chains you say?  In my neighbourhood alone there are 4 six different choices - all chains.  And then there are a number of small independents.

[Grey Fox]

Also, its a bit laughable to suggest, as the government now does, that there is limited competition in the grocery sector.  It is one of the most competitive businesses going because profits depend on volume.  They all need to find a way to get the consumer to  purchase from them.  They are not competing on price (unless they use lost leaders) because their margins are already so thin. 

There is limited competition because the government allowed it to become this way.  There's only 3 grocery chains in Canada.  Walmart doesn't make a dent, their Sam's Club never made much noise.  Costco is popular, but not enough to be threatening.

The margins are thin on groceries, but they are conglomerates involved in much more than groceries.

Really, only three grocery chains you say?  In my neighbourhood alone there are 4 six different choices - all chains.  And then there are a number of small independents.

Empire, Loblaws & Metro. What else is there in BC ?

[viper37]

Also, its a bit laughable to suggest, as the government now does, that there is limited competition in the grocery sector.  It is one of the most competitive businesses going because profits depend on volume.  They all need to find a way to get the consumer to  purchase from them.  They are not competing on price (unless they use lost leaders) because their margins are already so thin. 

There is limited competition because the government allowed it to become this way.  There's only 3 grocery chains in Canada.  Walmart doesn't make a dent, their Sam's Club never made much noise.  Costco is popular, but not enough to be threatening.

The margins are thin on groceries, but they are conglomerates involved in much more than groceries.

Really, only three grocery chains you say?  In my neighbourhood alone there are 4 six different choices - all chains.  And then there are a number of small independents.

IGA belong to Sobeys.
Metro has a bunch of subsidiaries too.
And there's Loblaw with all its subsidiaries[/url]


It seems there are 4 total supermarket chains, with the Pattison group, but it only operates in Western Canada.

[HVC]

We have a few others in Ontario like no frills and food basics, but they're just subsidiaries of other companies ( loblaws and metro in these examples)

[Jacob]

Yeah, Pattison is a local billionaire who owns a bunch of stuff.

I guess we should also add Walmart and Costco to the mix.

In some parts of town (at least) we also actually independt grocery stores - often associated with a specific ethnic group: Chinese, Korean, Persian etc.

Looking at the market share in 2021 (for Canada), the single largest market share goes to the Loblaws group (28%), with Sobeys second (20%). Metro, Walmart, and Costco have 28% together, with the rest split between companies at 3% or less market share.

I'm forced to agree with CC that the Canadian grocery business looks competitive, not monopolistic.

[HVC]

While not monopolistic in that there is more then one big big companies, they do have a history of working together to price fix.

[viper37]

Metro has 35% of the market share in Quebec and 24% in Ontario, so it's a significant player in the two biggest provinces. Couche-Tard is not significant in Canada for the grocery retail business, but they're big in their overall segment in Quebec and they have expanded through the US.

[Barrister]

Yeah, Pattison is a local billionaire who owns a bunch of stuff.

I guess we should also add Walmart and Costco to the mix.

In some parts of town (at least) we also actually independt grocery stores - often associated with a specific ethnic group: Chinese, Korean, Persian etc.

Looking at the market share in 2021 (for Canada), the single largest market share goes to the Loblaws group (28%), with Sobeys second (20%). Metro, Walmart, and Costco have 28% together, with the rest split between companies at 3% or less market share.

I'm forced to agree with CC that the Canadian grocery business looks competitive, not monopolistic.

Some of those ethnic grocery stores are actually owned by the big guys.  T&T is owned by Loblaws.  Chalo FreshCo (which carries a lot of goods for South Asian shoppers) is owned by Sobeys.

I'd never heard of Metro before - looks like it's only operates in Ontario and Quebec.  Out west we instead have Save-On-Foods, which is owned by Overwaitea/Jim Pattison.

Grocery store business is very clearly not monopolistic.  I guess you could try to argue it's an oligopoly, but really the barriers to entry aren't all that high and when you can identify 4 large national brands plus some large regional ones that doesn't seem true either.

[crazy canuck]

Also, its a bit laughable to suggest, as the government now does, that there is limited competition in the grocery sector.  It is one of the most competitive businesses going because profits depend on volume.  They all need to find a way to get the consumer to  purchase from them.  They are not competing on price (unless they use lost leaders) because their margins are already so thin. 

There is limited competition because the government allowed it to become this way.  There's only 3 grocery chains in Canada.  Walmart doesn't make a dent, their Sam's Club never made much noise.  Costco is popular, but not enough to be threatening.

The margins are thin on groceries, but they are conglomerates involved in much more than groceries.

Really, only three grocery chains you say?  In my neighbourhood alone there are 4 six different choices - all chains.  And then there are a number of small independents.

Empire, Loblaws & Metro. What else is there in BC ?

We don't have Metro - I think that is a Ont/Quebec thing.


Loblaws used to have a separate subsidiary in the West called Westfair but that was wound back into the parent company a number of years ago.  So, we do have Loblaws mainly operating what is branded as Superstores here.

As Viper noted the Pattison group is a big player out West.  They operate mainly under the brand Save on Foods and also the more upscale Urban Fare, along with Choices. And as a separate topic, Pattison belongs in the category of Billionaires it would be would difficult to establish is a bad person.

Whole Foods has a significant place in our market

Thrifties - now owned by Sobeys, which in turn is owned by Empire. They are in stiff competition with Pattison.

Those are the four main ones in my hood.  Along with a number of independents.

There is also a Walmart - they mainly compete with the Superstore for the bulk foods purchasers.

Then there is Costco - that is not in my neighbourhood, but it is also in stiff competition with the bulk stores like Superstore and Walmart.

[Grey Fox]

Sounds like Metro & Pattison have a Bell/Telus opportunity lurking out for them.

[crazy canuck]

Pattison is strongly independent, and always has been.  He could have made a lot more money selling his business interests. But he likes to run them instead.