The nation’s largest grocer Loblaw Companies Ltd. yesterday denied profiteering. An executive told the House of Commons agriculture committee Loblaw’s profit margin is no greater than it was before food inflation averaged 11%..“The food gross margin has remained unchanged and it’s been flat since inflation took off,” testified Jodat Hussain, senior vice president at Loblaw. Margins averaged 3.4% over the past five years, the committee was told..“Loblaw prices are not growing faster than costs and we are not taking advantage of inflation to drive profits,” said Hussain. “We operate in a very competitive industry.”.“Grocers operate at very low profit margins, less than four cents for every dollar we sell,” said Hussain. “This is dramatically less than other Canadian sectors including the suppliers of the products we sell. When the costs we pay go up, generally our prices to customers have to go up too.”.Dalhousie University’s Agri-Food Analytics Lab yesterday issued a Food Price Report forecasting prices will increase by another 5 to 7% next year. A typical family of four will pay $1,065 more for groceries in 2023, said the report..“As food prices rise, many are quick to blame grocers for profiteering and taking advantage of consumers,” testified Professor Sylvain Charlebois, director of the Analytics Lab. “The notion of profiteering has emerged as one of the most talked about issues in the last few months.”.Charlebois said his analysts studied six years’ worth of data from the largest Canadian grocers and found no evidence of profiteering. “This doesn’t mean changes are unnecessary,” said Charlebois. “Grocers are incredibly diversified and sell cosmetics, drugs, clothing. Margins are different.”.New Democrat MP Alistair MacGregor (Cowichan-Malahat, B.C.) said suspicions of profiteering were commonplace. “Profits in the food retail sector as a whole grew by 120% from 2019 through this latest period, swelling by $2.8 billion,” MacGregor told the committee..“Canadians’ perception of your sector, I think you would agree with me, is not very good right now,” said MacGregor. “They have seen the profit margins. They have seen executive bonuses.”.Executives at another grocery chain, Empire Company Ltd., said inflation was no gain for grocers. “We do not benefit from inflation,” testified Pierre St-Laurent, chief operating officer..“Many believe retailers deliberately profit from inflation,” said St-Pierre. “I can’t speak for other retailers but I can assure you this is completely untrue in Empire’s case.”.Empire Company net margins were 2.5% and 2.6% in the last two quarters, “a very low margin,” said St-Pierre. The figures were comparable to pre-inflation margins, he said.
