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After a select group of Canadian grocers raised rates to suppliers in 2020, the government decided a “code of conduct” was going to be created to prevent such actions in the future. However, Canadian grocer Loblaw said it believes the guidance will only force the cost to implement to be passed on to consumers, reports BNN Bloomberg.
So how much are we talking about? Loblaw says it believes that cost could be upwards of $1 billion (CAD), or $720 million in U.S. dollars.
Loblaw wrote a letter to both members of the code of conduct steering committee, as well as the industry subcommittee, with the retailer saying it cannot approve the code.
Loblaw Chief Financial Officer Richard Dufresne is requesting a special meeting to tackle the concerns.
Specifically, Loblaw says the code of conduct presents challenges that could risk product availability, which in turn would increase food prices. The code, according to Loblaw, would make it harder for retailers to hold suppliers accountable and would create instability in the retailer-supplier relationship. It would also have a negative impact on rewards programs.
Walmart Canada has also expressed concern about the code of conduct.
It comes at a time when Canadian officials have been pressing grocers to lower food prices while inflation continues to burn a hole in the consumer’s pocketbook.
Gary Sands, senior vice president of the Canadian Federation of Independent Grocers, and Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association, are both on the steering committee and said there is no evidence that the code of conduct would raise food prices.
However, both said it was critical that Loblaw be on board with the code of conduct, which is nearing completion and could be officially enacted by the end of the first quarter in 2024.
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