Thursday, December 7, 2023

Galen Weston is tone deaf

Galen Weston, who was recently kicked upstairs from his direct control of Loblaws staff and daily operations, shot himself in the foot while testifying Wednesday at the House of Commons Agriculture Committee which is probing reasons for food price inflation.

Weston said repeatedly it's not the fault of Loblaws and Walmart, two of the five biggest supermarket chain owners in Canada.

The politicians repeatedly asked Weston about a proposed Code of Conduct that has been under development for years.

The Empire Group has declared its support and Metro and Costco have kept quiet, limiting their opinions to private and ongoing negotiations over the proposals.

But Weston said bluntly that the code would increase grocery prices.

That can only be true if Weston refuses to abide by the code and continues to bully suppliers.

The list of bullying tactics is long and ugly, such as unilaterally and retroactively discounting suppliers' invoices. Loblaws did that at least twice in the last few years.

Another bullying tactic is to demand priority when supplies of an item run short, as was frequent during the first year of the COVID-19 pandemic. Remember toilet paper? Suppliers who tried to deal fairly with their customers by giving all of them a percentage of what they wanted were summarily cut off by Loblaws.

Loblaws told them to fill its orders, even if that took everything they had. That left Loblaws' competitors not only short, but often with nothing.

And if they refused and Loblaws cut them off, they were effectively losing access to more than 20 per cent of Canadians who buy toilet paper as part of their routine grocery shopping.
 
We know about toilet paper, but there were probably hundreds of other items to which Loblaws applied its bullying priority policy.

Loblaws and all of the chains have a long list of discounts and allowances they demand from suppliers. For example, there is one for canned products such as soups that is called a discount or allowance for dented cans. But it's applied whether or not there are dented cans.

This was one of many similar examples of bullying that emerged during a judicial inquiry into the Ontario grocery industry in the 1970s.

Weston said as another example of an objection he has to the code that disputes would be settled by a third-party independent arbiter. He doesn't want to be held accountable to anybody.

There is a reason why Weston is plain wrong when he said the code of conduct would result in higher prices. That's based on the assumption that there is no effective competition in the supermarket business in Canada, and that they all do things the code would ban.

That's patently false. There are hundreds of entrepreneurs, many of them serving smaller and rural communities of little or no interest to Loblaws, who treat their suppliers honourably as partners, not adversaries in a winner-loser battle tor profit.

Many of these smaller competitors have always been loyal to local suppliers. Not Loblaws. It likes to advertise its local dibs, but in fact has been the leading importer as evidenced in its President's Choice Insider Reports that began decades ago.

Weston seems tone deaf to why Canadians are angry, not only about rising grocery prices, but more specifically the biggest supermarket chains. 

And Canadians' blood pressure peaks when the chains announce quarterly financial results and profits.