Are Canadian grocery chains overcharging consumers?

This seems like an eternal question. 😊

I thought it was an easy one. Just look at the growth in both percentage and absolute amount of the cost and profit of grocery sales. It was not so in reality.

The big three Canadian grocery chains executives were questioned by Parliament recently on whether they charged too much for groceries.

The grocery stores defended that saying their profits are mainly from other non-grocery items and their profits on grocery are very slim. Therefore, some industry pundits said the key is transparency. Devils are in the details. Need to ask grocery stores to break down the profits by lines of business. It seems that is what the Competition Bureau is supposed to do. However, they got pushed back from the big chains citing they need to protect their competition intelligence. 😊 Is this going anywhere?

People always reason that merger and acquisition can give more bargaining power to the buyers. However, they key is to maintain the equilibrium of the business ecosystem. When one node in the chain got too powerful like the grocery chains, they can both squeeze the margin of the suppliers and overcharge consumers because of lack of competition. They can negotiate down the price by the vendors but they don’t have to pass on the savings to the consumers if they don’t have to. Maximizing shareholder value is always their number 1 priority.

It seems that the Federal government is considering a grocery rebate for the low-income families and individuals in the upcoming budget.  The article says that couples with two children could receive a payment of up to $467. A single person would receive $234 dollars and a single senior would receive $225. It doesn’t cover the dollar amount of inflation but better than none.  

Can’t wait to see the result of investigation from the Competition Bureau which will be due in June.

Published by Worthfy

Financial literacy and counselling

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