Lack of competition is driving up grocery prices, federal watchdog says

As Canadians deal with sky-high grocery prices, a new report finds some of the blame can be placed on the stranglehold the country’s big grocers have on our food bills.

The Competition Bureau Canada says a lack of competition is allowing a handful of companies to keep increasing what they make from grocery sales.

The report from the watchdog is pretty blunt — Canada needs solutions to help bring grocery prices in check and more competition is a key part of the answer.

While there are many external factors behind the recent, rapid rise in food inflation, the bureau says one long term-trend is the increasing amount Canada’s “big three” grocers have been making on food sales.

“Canada’s grocery industry is concentrated. Most Canadians buy groceries in stores owned by a handful of grocery giants. In 2022, Canada’s three largest grocers—Loblaws, Sobeys, and Metro—collectively reported more than $100 billion in sales and earned more than $3.6 billion in profits.” reads the report, adding that for new players and regional independents, the Canadian grocery industry is tough to break into.

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“Canada is a big country and opening new grocery stores is expensive and difficult. The industry’s big players operate thousands of stores and are well entrenched in the shopping habits of Canadians.”

The Competition Bureau is making a number of recommendations it believes will help bring grocery prices in check.

It wants federal and provincial governments to support innovative companies trying to disrupt the industry and shake things up with things like online-only grocery services.

It also suggests governments encourage the growth of independent grocers and allow international chains into the market to increase consumer choice.

The watchdog would also like to make it easier to compare shop by requiring standardized, harmonized unit pricing among stores.

And it recommends governments get rid of property controls that limit how real estate can be used by competing grocery stores, preventing new stores from opening.

“Competition pushes businesses to innovate, to improve the products and services they offer, and to enhance the efficiency of their operations. When these things happen, consumers benefit from increased choice, higher quality goods and services, and lower prices,” the report concludes.