How Loblaws turned a pandemic into a profit machine

There's a particular kind of silence in Galen Weston's voice when he talks about "shrinkflation." The kind a poker player perfects before doubling down.

The margin nobody could explain

In 2019, Loblaw's gross margin on food retail sat at 23.4 percent. By the end of 2023, it was 31.1 percent. The Bank of Canada, in its own working papers, called this "unusual and structurally persistent."

That's central-bank speak for they're charging more because they can.

What the hearings revealed

When Sylvain Charlebois testified before the Standing Committee on Agriculture in March 2024, he brought receipts. Not metaphorical receipts. Actual receipts.

A 4-litre jug of Beatrice milk: $4.97 in February 2020. $7.49 in March 2024. The supplier's wholesale price rose $0.31 over that period. The retailer's markup grew $2.21.

The pattern

This is not a story about supply chains. It's a story about market concentration. Loblaws, Sobeys, and Metro control 76 percent of Canadian grocery sales. They don't compete on price. They take turns leading.

This is what an oligopoly looks like when the regulators are asleep.

Did you know the Competition Bureau's last meaningful action against grocery price-fixing was 2017 — and the fine, $50 million, represented one half of one percent of that year's profit?

That's not enforcement. That's a permission slip.