Project Hammer: reduce collusion in the Canadian grocery sector

"Project Hammer aims to drive more competition and reduce collusion in the Canadian grocery sector."

In order to assess collusion among Canadian Grocers it is important to understand what gross margins have done, as input costs have run up materially as well. Canadian grocer margins have expanded materially, but nowhere near total food inflation costs. While groceries remain a competitive business in many countries, concentration in Canada has led to a material expansion of gross margins since the early 2010s from the low 20s to the low 30s:

https://ycharts.com/companies/LBLCF/gross_profit_margin.

This is a massive increase in gross margins no doubt, and reflects the concentration of market power in Canada, but it is also important to understand that the total food price increase is driven primarily by food itself increasing in price (COGS for grocers) and general CPI in Canada. Meaning Loblaws is driving a bigger wedge to themselves, as are other grocers, but the bigger problem is general dollar devaluation and food input costs to grocers. It is important to look at both aspects of this problem. Right now if you magically waived a wand to reduce prices by 10%, while cost of goods sold remained flat, it would basically wipe out 15 years of gross margin incease to grocers, but would barely benefit families struggling to feed themself (an extra 10 bucks per 100 spent). So yes grocers are a problem, but they arent the problem that politicians (NDP and Liberals especially) scape goat them to be. Federal fiscal and monetary policy is MUCH more likely to be the main culprit to food price increases, and most politicians should be looking in the mirror as opposed to simply blaming grocers (who are also to blame, but lets use pareto's principle here).

Date Value June 30, 2024 33.13% March 31, 2024 32.80% December 31, 2023 32.16% September 30, 2023 31.38% June 30, 2023 32.22% March 31, 2023 32.37% December 31, 2022 31.56% September 30, 2022 31.48% June 30, 2022 32.34% March 31, 2022 32.03% December 31, 2021 31.76% September 30, 2021 31.30% June 30, 2021 31.71% March 31, 2021 31.15% December 31, 2020 30.17% September 30, 2020 29.92% March 31, 2020 30.86% December 31, 2019 30.91% September 30, 2019 30.37% June 30, 2019 31.00% March 31, 2019 30.70% December 31, 2018 30.75% September 30, 2018 29.94% June 30, 2018 30.77% March 31, 2018 30.26% Date Value December 31, 2017 29.82% September 30, 2017 29.02% June 30, 2017 29.22% March 31, 2017 29.45% December 31, 2016 28.81% September 30, 2016 27.91% June 30, 2016 28.24% March 31, 2016 28.77% December 31, 2015 27.92% September 30, 2015 27.05% June 30, 2015 27.67% March 31, 2015 28.14% December 31, 2014 27.63% September 30, 2014 26.27% June 30, 2014 19.75% March 31, 2014 24.51% December 31, 2013 23.91% September 30, 2013 23.15% June 30, 2013 23.64% March 31, 2013 23.99% December 31, 2012 23.23% September 30, 2012 23.29% June 30, 2012 23.63% March 31, 2012 23.83% December 31, 2011 23.18%

>I don't buy "incompetence" as an excuse for multiple vendors colluding on prices.

I'm not sure why you're going so hard on this strawman. At no point did I argue it was okay to price fix. In fact in my previous comment I was pointing out specifically that it wasn't okay.

>Who cares if margins across the board are low?

>I'm upset that there is a history of collusion in the pricing of the food I have to buy to live. I support efforts to make sure more collusion is not happening.

Your original claim was "many of the groceries I buy seem to have gone up in price at a rate well outpacing inflation". arcticbull's response was that grocery store margins have stayed low. That seems like a perfectly reasonable response to your claim. You also mentioned bread price fixing, but I don't think anyone is claiming "well their margins are low so price fixing doesn't exist". It's clear that he was addressing your point about overall grocery prices. In that context looking at overall inflation makes more sense than pointing out one specific item has high margins. More to the point, inflation is derived from the price changes from a basket of items. It's therefore almost guaranteed that there's going to be items that will rise higher than inflation. The mere fact that some prices are rising faster than inflation isn't evidence of collusion or price fixing.

It's not the grocery stores creating this environment, it's their suppliers that have been consolidating non stop for 10 years.

This is the real story:

https://www.theguardian.com/environment/ng-interactive/2021/...

Doesn't making this data available also provide it to the grocers? Is it still "collusion" if they all just start raising their prices to public benchmarks on any items where they're low? They're not "working with each other" now. They're just "analyzing the publicly available data to remain competitive."

It also ignores that they often own the suppliers. "Woops, our supplies raised the price, so we need to too."