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The Shopping Cart | A code of conduct to save face for retailers?

Last week we learned about the creation of a code of conduct to protect consumers in the food sector. Good news for consumers, although many don’t understand why.

Posted at 7:30am

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As Marie-Eve Fournier reported last weekend, the consumer protection code of conduct is coming to town. We seem to be witnessing a miracle!

To get there, something of an uproar began in 2020 with the announcement of Sobeys/IGA Big Boss Michael Medline saying “enough is enough” at the Empire Club in Toronto. In recent years, major retailers, including Walmart, Loblaw/Provigo/Maxi, Costco, Metro, and Sobeys/IGA, have abused their power by brutally and indiscriminately imposing a variety of fees on their suppliers. Medline’s announcement rocked the industry.

Eric La Flèche and his team at Metro then explained to Marie-Eve Fournier that the relationships with the suppliers are “win-win”, in short that everything is going very well, Madame la Marquise. Now, just a few years later, many consumers believe that these brands are shamelessly capitalizing on an inflationary situation.

Our food retailers, rightly or wrongly, find themselves in the dock every day.

Over time, retailers realize that a problem may have arisen. Consumers might not have known it then, but these food giants had power, probably a little too much. The notorious dispute last year between Frito-Lay and Loblaw/Maxi/Provigo, which resulted in Lay’s potato chips disappearing from the retailer’s shelves for a while, exposed the issue, and that dispute was petty and shameful.

Federal Minister Marie-Claude Bibeau, supported by Quebec Agriculture Minister André Lamontagne, took the lead by establishing a working committee to create a code of conduct for the sector to give our food processors a voice. Since then it has really become Mr Lamontagne and Quebec’s business and the work project will finally make it possible to create a code that will help the food sector but above all consumers. The leadership of Mr. Lamontagne and the Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec (MAPAQ) has clearly compensated for the bewildering indolence of Ontario and the Ford government, where the food processing sector is the largest in the manufacturing sector in this province, must be remembered.

But consumers will win in the long run.

Many Canadians are unaware that suppliers in the food industry have to pay grocers to do business.

The fees are justified by merchandising costs, shelf space, details that everyone expects. But in recent years the situation has changed. Companies like Loblaw, Walmart, and Metro go further by unilaterally charging certain fees. It is now becoming increasingly difficult for independent processors and grocers to compete in Canada.

A code of conduct for grocers aims to change the culture of an industry that lacks vertical coordination and collaboration.

It’s also about tackling a broken business model. A code can neutralize power relations within the chain, stabilize retail prices, emphasize value and innovation for consumers, improve the security of the domestic food supply and encourage investment in the agri-food sector.

It must be clear that the Code does not act as a police force or as a means of nationalizing distribution. The spirit of the Code is to provide discipline and eliminate abuse. Governance around the Code will also allow for greater transparency, which we sorely lack. A secretariat will be set up to enable industry to hold itself and the public accountable. For some time now, with inflation hitting record highs, consumers have wanted to better understand the mechanics behind pricing. The current blur opens the floodgates for the worst speculations.

Consumers feel neither informed nor protected. The Code will certainly help in this chapter while also supporting independent grocers who deserve a chance to compete on equal terms against the biggest in distribution.

Innovation, diversity and food efficiency for all often trump the independents.

But it is in fact a voluntary code coordinated by government and led by industry. Compliance and consumer confidence will be major challenges right now. Time will tell if the code will take effect.

The irony is that in the beginning it was the processors who wanted such a code of conduct. Now that consumer trust in them is faltering, it’s the world’s Metros, Loblaws/Maxi, IGAs, and Walmarts that need such a code more than ever.