Grocery price wars bring unappetizing choices

TORONTO — The grocery price wars that have pushed a kilogram of bananas below the price of a chocolate bar may be good news for consumers’ wallets, but those who watch the industry see a race to the bottom that may leave shoppers with less selection and dwindling customer service.

Grocery wars are not new in North America, but they got a boost this past year as U.S. giant Target entered the Canadian market, forcing Walmart to up its game in the grocery department, and spurring a new wave of consolidation involving heavyweights such as Loblaw and Sobeys.

Kyle Murray, director of the school of retailing at the University of Alberta, said that while all the competition is likely to lower prices in the short term, “it also forces the companies to do things they may not otherwise do.

“In order to get those lower prices you’re going to see an increase in things that improve efficiency, but they may not improve the quality of the product or even the shopping experience,” he said.

That could mean the disappearance of an in-store bakery, or butcher, because it’s cheaper to package those products centrally and then ship them to the stores.

It may also result in retailers cutting costs by moving from local to global supply chains, which may not always take the most sustainable or environmentally-friendly approaches to delivering products.

“You can have issues around the quality of products and the way products are manufactured; the type of ingredients that go into some of the consumer packaged goods,” Murray said.

In March, Loblaw’s $12.4-billion purchase of Shoppers Drug Mart was approved, leaving the combined company with roughly 2,300 corporate, franchised and associate-owned stores across Canada, and nearly 1,800 pharmacies to introduce their grocery product lines.

Last year, Sobeys bought Safeway Canada in a $5.8-billion deal and promptly angered suppliers by demanding retroactive price breaks.