Oh Canada, the land of oligopolies and weak competition laws. Banking, telecom, airlines. Now grocery retailing is in the spotlight. Is there anything we can do to break up or regulate the Big Five grocery chains (two U.S.-owned) that control 76% of the Canadian grocery market?

by George MinakakisGeorge Minakakis
Competition Bureau - Canada Needs More Grocery Competition.
HERE'S HOW

First, there are by-store counts plenty of competitors, but none really with an opportunity to scale and only one more new chain won’t do; it will be more of the same. You need enough consolidation to threaten to dilute a relationship that seems competitively cordial. Then it will drive innovations, but pricing is another issue related to supply and demand and accepting less profits in a thin-margin business model has implications. Which likely needs disruption itself.

If we were to be a little disruptive ourselves with grocery, how can we reinvent the Canadian Market? Well, let's move more grocery shopping to online and home delivery. Why? Because it will lower overhead costs, especially with fewer stores. If consumers knew that they could save more by buying from an online grocer, they would adopt much faster.

In August 2020, the competition bureau said it was investigating Amazon. To date, there is no decision. Amazon is apparently "impacting competition to the detriment of consumers and companies that do business in Canada."

Isn’t that what consumers are feeling with grocery stores? I highlight the “detriment of consumers” And smaller independent competitors.

Everyone wants to break up Amazon for competitive threats and unfair business practices and models. Ironically, the very same people and businesses who don’t like regulations want regulators to intervene.

So why isn't the competition bureau intervening in Grocery? Even with all these independent locations, collectively, they don’t have the buying and marketing power of the Big 5!

The Bureau’s comments are no more than likely expressing frustration or acknowledging the limitations of its own ability to tackle this complex issue. And they know if they break up or regulate Amazon, they should do the same to a grocery Oligopoly.

#retailing #grocerystores #strategy #Walmart #Loblaw #Costco #Sobeys #Metro #innovation #ecommerce #disruptiveinnovation

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