Loblaw prepares for rising food prices by cutting review times and boosting Canadian-made product supply
Loblaw is accelerating its process for reviewing supplier price increase requests due to the anticipated impact of upcoming tariffs on costs, according to BNN Bloomberg.
The grocer, which typically evaluates proposed increases within 12 weeks, has reduced this timeline to six weeks to assist suppliers in managing the effects of these tariffs, spokesperson Catherine Thomas stated in an email.
The United States plans to impose a 25 percent tariff on Canadian imports next week, prompting the Canadian government to announce retaliatory measures.
These actions are expected to increase the cost of goods imported from the US, particularly fresh produce, which Canada relies on during winter months.
“The goal was to outline to our suppliers steps we can take mutually to navigate potential challenges faced in light of the proposed tariffs from both the US and Canada,” said Thomas.
However, she emphasized that Loblaw is committed to minimizing the impact on customers. “There's still a lot we don't know, but we're doing everything we can to lessen possible impacts for both our suppliers and ultimately for customers,” she added.
BNN Bloomberg reported that Metro is implementing similar measures to support its suppliers, spokesperson Marie-Claude Bacon confirmed in an email.
Loblaw is also increasing its supply of Canadian-made products and enhancing in-store visibility to help customers identify domestic items.
CEO Per Bank noted during an earnings call earlier this month that the company has observed a “significant uplift in sales” of products labeled as prepared in Canada.
He mentioned that less than 10 percent of the company's supply comes from the US, primarily produce. “If tariffs are applied on produce, there's where we will be mostly impacted,” Bank stated.
In addition to tariffs, the depreciation of the Canadian dollar is exerting further pressure on the cost of US imports.
According to Loblaw's report on food inflation released Thursday, this affects direct imports such as lettuce and tomatoes, as well as products priced in US dollars, like certain coffee and citrus items.
The report also noted that “suppliers continue to seek to pass on their higher costs,” and while many of these increases are “justified given the current economic situation,” Loblaw is collaborating with suppliers to manage prices for customers.
Nonetheless, the company anticipates that pricing pressures will persist in the coming months.
Loblaw and other major grocers have faced scrutiny over food inflation, with accusations of profiting unduly from rising prices, which they have denied.
During the February earnings call, Chief Financial Officer Richard Dufresne observed that Loblaw continues to receive higher-than-normal price increase requests from large global suppliers.
The anticipated tariffs are expected to have a broad impact on consumer prices.
