Feds looking for a foreign competitor to Big 5 grocers

Industry Minister François-Philippe Champagne is reaching out to grocery leaders around the world to bring a foreign competitor to Canada and challenge the big five retail chains, including Loblaw, Empire, Metro, Walmart, and Costco, according to the Toronto Star.

Champagne said this move would be a “net benefit” for Canadian consumers, considering the long-standing consolidation in the grocery market.

“I’ll be working with anyone who wants to consider it,” Champagne said. “I’m not the shy guy; usually, I pick up the phone.”

If successful, this initiative would mark the first time a foreign grocer has gained a foothold in Canada in decades. Champagne, known for attracting foreign players to Canada, drew a parallel with the $13-billion deal for Volkswagen to establish a battery factory in St. Thomas, Ont.

“Volkswagen started with one phone call, so why not?” he said. “We have not had an international player looking at the Canadian market for a long, long time. Now, I think there is more momentum.”

Since September, Champagne has urged top Canadian grocery chains to lower prices or face new federal taxes. Some have responded with extra discounts or price freezes. Still, critics are dismissing Champagne’s approach as political theatre, considering a decline in food prices from a four-decade peak earlier this year.

Champagne said he will remain persistent, seeking further discounts and considering legislation if needed. The government’s long-term strategy to lower grocery prices involves injecting more competition, supported by recent legislation strengthening Canadian competition laws.

Part of this legislation aims to address “restrictive covenants” in lease agreements, which can hinder the entry of foreign grocers. Champagne said that foreign grocers have listed these covenants as a barrier.

However, industry insiders and a Competition Bureau report acknowledge the challenges ahead. The grocery market’s concentration, bilingual labelling requirements, and concerns about adapting to Canada’s multicultural grocery landscape make entry difficult for international retailers.

Despite industry claims that Canada’s grocery market is competitive, Champagne said he welcomes concerns from homegrown retailers about talks with foreign players.

The Retail Council of Canada, representing major grocers, said the industry has “always welcomed competition” and encouraged the government to “look equally close” at global food manufacturers pushing price increases on retailers, according to the Star.