Despite an online campaign urging shoppers to boycott Loblaw stores, experts believe that the impact on the company’s bottom line may be minimal. The boycott was organized on a Reddit group with over 63,000 members expressing frustrations with rising costs of living and groceries. Loblaw has been seen as the face of food inflation in Canada, although they argue that increased costs from suppliers are the reason for grocery price hikes. Critics on the subreddit are unconvinced by Loblaw’s explanations, leading to the boycott. Loblaw has become a lightning rod for consumer frustrations with rising grocery prices due to its position as the largest grocer in Canada.
The May boycott started on the same day Loblaw reported a nearly 10% increase in net profits for the first quarter. During the earnings call, Loblaw CEO highlighted the company’s success in attracting customers with promotions and discounts. The company’s share price has been rising on the TSX, demonstrating shareholder confidence despite the boycott. Loblaw has responded to the boycott by emphasizing its commitment to value and efforts to combat inflation. The company plans to open new discount stores and offer promotions to provide affordable options for customers. The CEO acknowledged the need to win customers’ business every day and expressed a desire to improve the customer experience.
The Canadian government has also weighed in on the issue of rising grocery prices, promising to promote competition in the sector and potentially attract international retailers to the market. Industry Minister François-Philippe Champagne urged grocery chains to listen to their customers and take action. However, experts suggest that messaging from grocery CEOs about their efforts to stabilize prices may ring hollow to consumers. Instead, focusing on controlling costs in stores could be a more credible approach. Despite the boycott, experts believe that it is unlikely to have a significant impact on Loblaw’s business due to consumer habits and limited grocery options in Canada.
While the boycott may not have a lasting impact on Loblaw’s business, there are potential knock-on effects. Customers who try out rival grocers during the boycott could loosen Loblaw’s grip on the market over time. This may not immediately affect quarterly earnings, but could compound over time. Experts warn that the frustrations of shoppers are not likely to disappear once the boycott ends, as long as grocery bills continue to rise. The ongoing consumer discontent with grocery prices will need to be addressed by policymakers and grocers in the months to come. Despite the challenges, Loblaw’s position as a major player in Canada’s retail landscape means that it will likely take more than a boycott to significantly impact its bottom line.
