A Lob-Law unto themselves

Back in the summer of 2023, the Canadian Government summoned the heads of the major grocery chains in Canada to a meeting in Ottawa, demanding that they do something to reduce the rate of food price inflation.  If we're naming names, there were five chains at the meeting -- three Canadian-owned (Loblaws, Metro and Sobey's) and two US-owned (Costco and Walmart).  

The pace of food price inflation has in fact fallen sharply since that first meeting, though there's no evidence that the pressure from the government had much to do with it. The Government has tried to keep the issue on the front pages, even going so far as to hint that it was trying to attract a foreign grocery chain into the Canadian market to increase the level of competition, a bizarre thing for any national government to do. It has also announced its intention to impose a legally-binding Code of Grocery Conduct on the existing quintet.

For the most part, the CEOs of the five firms have largely suffered through all this posturing in silence, with one exception. Loblaws CEO, the multi-billionaire Galen Weston, has been visibly angry about the whole process, blaming the rise in food prices during and after the pandemic mainly on the company's suppliers. He has also begun to warn that the Code of Grocery Conduct as currently propose will tend to push prices even higher, not lower them. 

This week we have found out why Galen can be so confident about this outcome. Loblaws has announced that it will be ending its current practice of cutting the prices of soon-to-expire food items -- bread. veggies, prepared meals and such -- by up to 50 percent in order to get them off the shelves. It portrays this deeply cynical move in an even more deeply cynical way, as providing "more consistency with our competitors".  I don't know about you, but I have generally thought that competition is supposed to help keep prices down, not provide cover for putting them up, but here we are.

As the linked article suggests, this looks a lot like collusion to a lot of people, although one of the quoted experts suggests it is "conscious parallelism" -- watching your competitors and imitating them.  Fair enough, but the timing of this, coming after all the meetings with the government and the threat of the Code of Grocery Conduct, looks very much like Loblaws flipping the bird at the government.  If Galen Weston actually wants a Piggly-Wiggly, or more likely an Aldi, across the street from one of his stores, he's going the right way about it.

UPDATE, January 20:  Well, here's a thing you don't see every day!  Loblaws has reversed its decision to eliminate the 50 percent discount as a result of the uproar its initial announcement caused.  Well done, Galen Weston, but next time, "measure twice, cut once".