Can a foreign grocer compete in Canada?

Many of us Canadians continue to grapple with the rising cost of groceries, leading to the call for a boycott of Loblaw stores this month. Now, the federal government has been looking hard at this issue, and its latest initiative focuses in on getting more foreign chains to enter the Canadian market. But experts say they that might not be as easy as it seems. CBC senior business writer Jenna Benchatrid is here to explain why. So, Jenna, good to have you on set. Let’s talk about what the Industry Minister is saying about possibly putting these foreign chains into Canada. Absolutely. It’s all about spurring competition in the grocery sector and trying different measures to bring prices down. Right now we have 5 dominant players, blah blah Sobeys, Metro, Walmart and Costco. In theory, bringing in another supermarket might help drive prices down. It might encourage innovation. It might make groceries just a bit more affordable during a time when many Canadians are struggling with those costs. And I want to bring in a clip here of the minister talking a little bit about this on Tuesday in response to a question about some of the frustrations that shoppers might be feeling right now regarding high prices. I always said to the end of the grocery chains in the country, listen to customers. You know, people are hurting and they want you to be part of, you know, helping them in this particular moment in time. And and some of them have done better than others in terms of responding to this call for action that the Prime Minister launched and that we obviously follow up. And at the same time, I’ve said it and I continue is to look at whether they would be foreign deep discounters that would be interested in the Kenyan, the market. You know, Jenna, there’s so few issues that almost everybody agrees on, but the high cost of groceries is certainly one of them. Almost everyone I speak to says they’re feeling the pinch at the grocery store. So theoretically this sounds like a great idea, bring these foreign markets into the Canadian system, but it’s not as easy as it seems. Why is that? Canada has some unique challenges. Our size is certainly a challenge. We have major cities that are spread over a vast distance which makes large scale supply chain management very difficult and expensive. Consolidation is a factor to as I mentioned we have five major well established grocery supermarket retailers here and they have relationships with suppliers, they have loyalty programs for customers. So it would certainly be very difficult for a new player to come in and and disrupt that and target learn that the hard way when they came to Canada in 2013. I want to bring in another clip here of a food marketing professor who we spoke to who talks a little bit about some of the challenges that Target face specifically and and he also talks about why a foreign grocer might be reluctant to enter the Canadian market. Most of these chains are either publicly listed or have a very strong board of directors looking over shareholders interest. The first thing they’re going to ask is what’s the return on investment And it’s a bit of a challenge. It’s a bit of a tough sell. Think of the last US retailer that came in here, Target and pulled out after a few years because they just couldn’t make the supply chain and everything else work in their favor. And I think an international supermarket chain would face similar types of situation or or factors. Almost forgot about Target. There was also Nordstrom. Everyone was so excited. Nordstrom’s coming to Canada didn’t do well, but ultimately the grocery initiative would be to lower prices for Canadians. So what other options are there? Well, you know, independent grocery stores, food co-ops, those are certainly options for many Canadians. And that those were actually another measure that the Competition Bureau mentioned in a report that it released last summer about competition in the grocery sector and how we can sort of mitigate some of those high prices. But accessibility is a factor for a lot of Canadians being in proximity to A to a grocery store, and many Canadians have no choice but to shop at the store that is closest to them. OK. This is really interesting. Let’s see how it develops. Senior business writer Jenna Benchitrit, thank you so much. Thank you.