Federal Industry Minister François-Philippe Champagne said he'd consider it a good thing if Canada's major grocery chains were upset about his talks with foreign players. "That's good if they're concerned,"
www.thestar.com
Feds trying to encourage a new grocer to enter the market. Aldi, anyone?
I offered my thoughts on this in the Federal Politics thread;
I expect that in isolation most federal program are inconsequential. Adding a new program that is not in the top tier of spending can seem like peanuts. That's how death by a thousand cuts works. No disagreement there; though I see this one as comparatively good value for money; though, I...
urbantoronto.ca
Aldi Sud or Aldi Nord (Trader Joe's in the U.S. ) are the most likely players the feds would solicit, but not the only options.
That would be nice but what really needs to be done is to break up what we already have.
I agree that this is an essential part of the mix; its also what would attract a foreign player, in part.
If Loblaws, Empire and Metro were forced to break up their holdings it would immediately provide the competition required to lower prices.
I wouldn't go quite that far.
I do think it would be helpful.
But when you think of reasons for grocery prices being what they are in Canada, its important to look at some other factors:
1) Supply management in Dairy, Chicken and Pork.
2) Listings Fees to get into national grocers protect incumbent suppliers. For clarity, if you came up with a new chocolate chip cookie to sell to a national grocer, you require to be a listed vendor with them before they will even consider buying from you. That will be a base fee of ~$40,000 w/no purchase order in hand. That fee increases for each store you want access to and can run into the millions.
Additionally, fees vary based on whether your product is at eye level. So if you pay the base fee, you're on the bottom or top shelf where customers are less likely to notice you.
3) Shelf monopolization. Lays controls about 1/2 of the snack aisle in most major grocers. I don't mean they have 50% of the space, I mean they 'own' (rent) that space and have control of everything that goes into it, the point that its usually their own staff who come in to refill the shelves, not store staff.
Coke/Pepsi similarly dominate soft drink aisles and use their own staff to restock.
This leaves very little room for a competitor to challenge them.
4) Beef: This country has only 3 major beef slaughterhouses. Together they have an 85% marketshare. Two are in Alberta and a smaller player can be found in Guelph. That's it.
This oligopoly constrains price and innovation.