Say goodbye to 50% food discount: Loblaw policy change sparks concerns about anti-competitive behaviour

Sylvain CharleboisWith rising food prices, consumers seeking deals can benefit from food rescuing. According to a recent survey conducted by Dalhousie’s Agri-Food Analytics Lab, nearly 20 percent of consumers now regularly purchase “last day of sale” deals at grocery stores, often referred to more broadly as “enjoy tonight” deals. Some of these discounts can be significant.

However, that is about to change if you are accustomed to seeing food products discounted at 50 percent. Starting on January 14th, Loblaw will cease to offer “last day of sale” items at a 50 percent discount.

Although Loblaw did not immediately confirm the move, the company eventually responded to an inquiry from the Lab, confirming the policy change. From now on, consumers will only find products discounted at 30 percent in all of Loblaw’s owned and operated stores. While this policy was already in effect in some parts of the country, it is now extended nationally.

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So, fellow shoppers, the days of 50 percent discounted products are behind us. It’s disappointing, but Loblaw’s explanation for discontinuing the 50 percent practice deserves attention. This is what Loblaw had to say:

“Historically, our stores offered discounts ranging from 30 percent to 50 percent on ‘serve tonight’ type products. We are now moving towards a more consistent and predictable pricing strategy, aligning ourselves with our competitors. Nevertheless, we will continue to provide a range of discounts through in-store promotions and flyers, as well as offering deep discounts on food nearing expiration through the Flashfood app.”

Loblaw’s response raises two important questions. First, the company states that it is aligning its discounting approach with competitors. Generally, discount-matching policies at grocery stores are not inherently seen as anti-competitive. However, if multiple grocery stores adopt similar policies to maintain high prices, even on products close to expiration, it could potentially be considered anti-competitive behaviour.

What is concerning is that Loblaw may not have considered the broader public’s perception of its discount-matching strategy. It likely never occurred to them that this move could raise suspicion. This is another example of how price-fixing or discount-matching practices are prevalent in the industry, and this issue extends beyond just Loblaw. The culture within the industry seems to have normalized the co-ordination of prices across competitors without admitting to it, which is akin to an individual alcoholic in denial about having a problem.

In a free market, the focus should be on finding innovative ways to remain competitive rather than simply mirroring the competition. Canadians expect more from their grocers.

The other issue highlighted by Loblaw’s statement is the role of food-rescuing apps like Flashfood. Food Hero and Too Good To Go are also other very popular apps. The change in Loblaw’s discount policy will likely steer more “last-day sale” enthusiasts towards these apps. It is highly unlikely that Loblaw’s decision to end 50 percent discounts will lead to more food waste; instead, the products will be sold through other channels. What Loblaw is doing, however, is preventing more consumers from focusing exclusively on discounted items at the periphery of the grocery store, where the more profitable fresh goods are located.

While Loblaw didn’t publicly announce this change, it would have been appreciated if they had released something, anything. Although this change may be frustrating, the rationale behind reducing discounts is quite perplexing. This is an issue that the Competition Bureau should investigate. Otherwise, Canadians may continue to find similar pricing strategies in all major grocery stores. If this is not collusion, it certainly appears to be very close to it.

Once again, it’s important to emphasize that this issue extends beyond Loblaw; it is an industry-wide concern that needs to be addressed. The bread-price-fixing scandal was just the tip of the iceberg.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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