Loblaw increases rates: concerns for local suppliers

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While many consumers have vowed to buy more local in these difficult times, giant Loblaw will increase fees for its suppliers, which could hurt small players, experts say.

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“If you are looking for local food products, well, hurry, because you may see less and less,” responded Sylvain Charlebois, director of the food analysis laboratory at Dalhousie University.

“We will probably see more imports from abroad and we will not see as much product from Canada in stores,” he added in an interview with the Toronto Star.

The Loblaw company, owner of the Maxi and Provigo banners, justified its decision by the difficult economic environment. Charging higher fees was the only way not to raise prices for customers, suggested the largest food retailer in Canada.

“As we face pressure, one option is higher prices for customers, but we don’t want to take this approach because Canadians face sufficient financial pressure,” said Catherine Thomas, spokesperson the company.

Sylvain Charlebois doubts, however, that this way of doing things can really slow down the price increase on the shelves.

He is also concerned about Canada’s food security, as suppliers may be tempted to relocate their manufacturing to the United States to save money.

Certainly, Loblaw saw its profits decline during the pandemic as the company had to invest in its ordering department and was forced to pay its employees more.

The company told the Post that the fee hike will be 1.25% and will be in effect from early next year.

These tariffs allow suppliers to carve out a prominent place for themselves on the shelves for customers.

Delivery costs to distribution centers and stores will also climb, according to information obtained by the Toronto daily.

Loblaw is not the first big name in the industry to make such a decision. Suppliers have already seen their bills increase in order to be able to sell in Walmart.

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