Sobeys CEO is ready for grocers' code of conduct
The chief executive of Canada’s second-largest supermarket chain criticized two of his chief competitors on Wednesday for foisting a set of “repugnant” new fees on suppliers
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'It’s a very complex industry and I don’t want unintended consequences
Michael Medline at Empire Co. Ltd. — which owns Sobeys, Safeway and FreshCo — said the fees announced by both Walmart Canada and Loblaw Cos. Ltd. will hurt manufacturers, farmers and smaller grocers, and threaten to drive up prices for consumers.
“Taken to the extreme, some of these behaviours are just plain bad for Canada,” he said during a virtual event hosted by the Empire Club of Canada. “It’s just not right.”
Medline said Empire is now open to imposing a code of conduct in the industry, echoing manufacturing advocates that have been pressing the federal and provincial governments to rein in bullying tactics in the heavily consolidated grocery retail sector.
‘Gap in legislation’: Stronger law needed to launch wage-fixing probe into grocers’ behaviour
“It’s a pretty exciting day,” said Michael Graydon, chief executive of Food, Health and Consumer Products of Canada, one of the leading advocates for a grocery code. “I’m just absolutely delighted that he would come out publicly and have that conversation today.”
Medline, who was once CEO of Canadian Tire Corp. Ltd. before joining Empire in 2017, said he finds that grocers and suppliers have “the worst relationship I’ve ever seen in my couple of decades in retail.”
His comments are liable to intensify the debate over an industry code of conduct, which ramped up in July after Walmart Canada imposed a non-negotiable fee on suppliers of up to 6.25 per cent on the cost of goods to help pay for its $3.5-billion infrastructure investment.
Manufacturing associations warned that other major chains would follow with similar fees and Loblaw last week told suppliers it would levy a new 1.2-per-cent fee, as well as increased distribution and marketing charges, noting it was investing $6 billion on infrastructure over the next five years.
“I don’t think a government unilaterally coming in and putting in legislation will probably help, because it’s a very complex industry and I don’t want unintended consequences,” Medline said. “It’s time that we got together as an industry and had a set of very simple, value-driven ground rules so that we don’t get in this mess and that we have a very healthy food supply chain.”
The federal government has said it does not have the jurisdiction to regulate the grocery industry, but encouraged the provinces to look into it.
In a letter this week, a coalition of trade groups representing farmers, food processors, bakers and independent grocers urged federal Agriculture Minister Marie-Claude Bibeau and Ontario Agriculture Minister Ernie Hardeman to raise the issue when they co-chair the next Federal-Provincial-Territorial Ministers of Agriculture and Agri-Food meeting in November.
Michael Medline at Empire Co. Ltd. — which owns Sobeys, Safeway and FreshCo — said the fees announced by both Walmart Canada and Loblaw Cos. Ltd. will hurt manufacturers, farmers and smaller grocers, and threaten to drive up prices for consumers.
“Taken to the extreme, some of these behaviours are just plain bad for Canada,” he said during a virtual event hosted by the Empire Club of Canada. “It’s just not right.”
Medline said Empire is now open to imposing a code of conduct in the industry, echoing manufacturing advocates that have been pressing the federal and provincial governments to rein in bullying tactics in the heavily consolidated grocery retail sector.
‘Gap in legislation’: Stronger law needed to launch wage-fixing probe into grocers’ behaviour
“It’s a pretty exciting day,” said Michael Graydon, chief executive of Food, Health and Consumer Products of Canada, one of the leading advocates for a grocery code. “I’m just absolutely delighted that he would come out publicly and have that conversation today.”
Medline, who was once CEO of Canadian Tire Corp. Ltd. before joining Empire in 2017, said he finds that grocers and suppliers have “the worst relationship I’ve ever seen in my couple of decades in retail.”
His comments are liable to intensify the debate over an industry code of conduct, which ramped up in July after Walmart Canada imposed a non-negotiable fee on suppliers of up to 6.25 per cent on the cost of goods to help pay for its $3.5-billion infrastructure investment.
Manufacturing associations warned that other major chains would follow with similar fees and Loblaw last week told suppliers it would levy a new 1.2-per-cent fee, as well as increased distribution and marketing charges, noting it was investing $6 billion on infrastructure over the next five years.
“I don’t think a government unilaterally coming in and putting in legislation will probably help, because it’s a very complex industry and I don’t want unintended consequences,” Medline said. “It’s time that we got together as an industry and had a set of very simple, value-driven ground rules so that we don’t get in this mess and that we have a very healthy food supply chain.”
The federal government has said it does not have the jurisdiction to regulate the grocery industry, but encouraged the provinces to look into it.
In a letter this week, a coalition of trade groups representing farmers, food processors, bakers and independent grocers urged federal Agriculture Minister Marie-Claude Bibeau and Ontario Agriculture Minister Ernie Hardeman to raise the issue when they co-chair the next Federal-Provincial-Territorial Ministers of Agriculture and Agri-Food meeting in November.
© Kevin King/Postmedia/File Empire Co. Ltd., owner of supermarket chains Sobeys, Safeway and FreshCo, said it would not be instituting a supplier charge.
“It is unfortunate to see grocers impose these costly fees during this pandemic,” Bibeau’s office said in an email on Wednesday. “We are pleased to see the interest from some of our provincial counterparts to examine this matter.”
Medline said he would be open to a “simple and short” code, similar to the model used in the United Kingdom. But he also said that the code would have to apply to all players in the industry, unlike the voluntary version used in Australia.
“It has to cut both ways,” he said. “Suppliers need to also promise to play fair.”
The moves by Walmart and Loblaw had some industry insiders questioning whether Empire was next. But Medline made it clear he would not follow suit, noting the company had worked closely with suppliers to manage massive demand spikes in the early days of the pandemic this spring.
“It is unfortunate to see grocers impose these costly fees during this pandemic,” Bibeau’s office said in an email on Wednesday. “We are pleased to see the interest from some of our provincial counterparts to examine this matter.”
Medline said he would be open to a “simple and short” code, similar to the model used in the United Kingdom. But he also said that the code would have to apply to all players in the industry, unlike the voluntary version used in Australia.
“It has to cut both ways,” he said. “Suppliers need to also promise to play fair.”
The moves by Walmart and Loblaw had some industry insiders questioning whether Empire was next. But Medline made it clear he would not follow suit, noting the company had worked closely with suppliers to manage massive demand spikes in the early days of the pandemic this spring.
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