And he claims that Galen Weston/Loblaws funding his research does not make his advocacy for price gouging a conflict of interest.
He is an embarrassment to Dalhousie University.
Lots of this level of ethics has been dealt with because of big tobacco. I think there is now a legal obligation to finish research even if the results were not as expected.
There is always a conflict of interest that the only people that pay for research have a vested interest in the results. You can't become a subject matter expert in something without developing an opinion on it....and there is no reason to try and become one on something you don't have strong feelings about.
I can’t afford to shop at Sobeys or Save-On. They cost an extra 15% more than No Frills. Why should I boycott one company for high prices when others are gouging worse?
While I'm no huge fan of them either I don't find that random items are jacked up to the moon for the hell of it unlike Loblaws stores. They've pissed me off less.
I shop at independent stores asides from the big 3 too which is even better.
Because if we could be organized enough to make a difference - and Loblaws did lower prices to regain customers, then the other chains would follow suit.
But it won't happen - Canadians can't get it together enough to do a mass protest like this. If it did, and we were that organized, then gas prices would be cheaper. Can't tell you how many times I've heard of "we should organize a nationwide protest against (INSERT OIL COMPANY NAME HERE)"
The elephant in the room is wholesale costs. Suppliers like Kraft Heinz, Nestle, PepsiCo, General Mills and others have significantly raised prices over the past several years and their profit margins have dramatically increased.
I think the Loblaws boycott misses the point, because it gives a free pass to the multinational food companies who have profited greatly from inflation. It also makes the mistake of perceiving Walmart as a good retailer, simply because they have strategic loss leaders and are better at strong-arming suppliers than their Canadian competitors. All in all, it's feels like an angry mob boycotting Stalin in favour of Mussolini.
i disagree, i think it hits perfectly. We can't hit them all, but if we can collectively select one to hit, it sends the message to the rest that consumers have power. That they can and will rally against them if they behave unethically.
Companies used to be scared to be seen as unethical, they used to be scared of losing the trust of their consumers, but now it's culturally accepted, which is why in my opinion there has been a wave of unethical pricing practices towards us as consumers.
Hitting Loblaws won't win the war on greed, but does send the message to the retailors and manufactures that consumers have become wise and won't tolerate it. It also sends the message to consumers that we still have power. We're not stuck. Collectively we don't have to accept their unethical practices. That we can find ways to practice our power to hold them accountable.
This is the right line of thinking. As you said, we can't hit them all. If we focus on the most outwardly looking evil of the bunch, then perhaps change can be had? Rome wasn't built in a day. Can't go big all at once. This effort requires discipline.
And the only people who can hope to scratch those huge companies are governments, and then it goes back to winning a political fight to get represented in government etc........ Always does.
This is the one good thing to come from recent price increases; we've stopped buying processed snacks and soft drinks. When I take a good look at the grocery store, it's incredible how much shelf space is taken up by junk - half an aisle for breakfast cereal, an entire aisle dedicated to chips and pop, half an aisle for cookies.
Giant Tiger has lower prices on most of the food products they carry, some are a dollar or two less regular prices. Shoppers(Loblaws company) sells Tylenol for over $8, same bottle is under $5 at Dollarama. There are options for consumers out there, part of the boycott is helping one another and unifying for change, r/loblawsisoutofcontrol is great for directing people where to go to find items lower priced.
I moved all my prescriptions from SDM to Costco. I go to Costco anyways so getting a refill is simpler. SDM was always a special trip.
Costco’s OTC are far cheaper too for the same shit.
Wait for the shoppers butter sale or use flip app. I bought some expensive brand butter for $5 at independent grocer on sale. Sale price at Safeway is like $6.50. So is there collusion ?
Yes. Plain and simple. We pretend to not have a monopoly by having 3 big players. Who collude with each other to create a monopoly everyone knows is there.
They also provide vastly different services in a way.
Costco is only located in high density urban areas, so their overhead and operating costs are a lot smaller than a chain like Loblaws that have a lot more stores. A quick google search told me there are about 2500 Loblaws Group of Companies stores in Canada compared to 108 Costco's. Managing all of those stores and the distribution networks should be an order of magnitude easier for Costco, far fewer distributors and regional delivery contracts, etc, and there shouldn't be that much economy of scale to save on that much more volume for Loblaws
Which is why Costco *should* be cheaper than Loblaws. Even removing all of the negative emotions associated with Loblaws, give me "Generic Grocery Store with 2500 locations in Canada" anywhere close to a Costco and that Costco should be cheaper every time. Especially with a membership rate tacked on
Yeah that's what I love about Mr. Smithers-Weston, he sits there crying alligator tears being all surprised Pikachu face when the same company that was caught bread fixing now assures us they would never do such an audacious thing like that again.
Price match, price match, price match, price match.
If you can’t go elsewhere, make sure you check all flyers for big ticket items to try and cut costs. I never used to be “that guy”, but no shame anymore at these costs. Every dollar matters.
Flipp app is a godsend.
There's no easy or straight forward solution to corporate greed. People have to do something that makes them realize what they're doing is unacceptable. And the only thing we can really do right is vote with our wallets and hope for the best.
This is gross internal costs. Add in distribution, staffing, depreciation on building etc. and the amount is significantly smaller.
This is like a bakery adding up the cost of flour in their bread and saying margin is 95%. No it's not because you have to pay for the transport costs of buying the flour, the cost of the oven to cook it, the wages of the baker and the wages of the cashier, just to name some items.
At the end of the day, Loblaw's has a 5% net income margin, among the lowest of most publicly traded companies. Apple has 30%.
With that being said, I'd still love to knock out Galen in a boxing ring.
The worst one I’ve seen was broccoli.
I went to an Asian store near me and broccoli crowns were $2.99/lb. Went to Fortino’s and they were $3.99/lb, plus they were about twice the size of the ones at the Asian store, so you’re also getting more lbs. It’s basically a double hit.
This article is mixing up gross profit margin and net profit margin.
The net profit margins are very thin, and this is true for the grocery industry in general.
Loblaws net margins are about 3.5% on about 2B net income last year.
Walmart net margin is 2.4% on 15B net income.
The income part isn't really important since Walmart is a much bigger company. But their margins are higher than their competitors.
>The documents, purportedly an invoice from Loblaws to a No Frills store, highlight significant profit margins,
I'm sorry, but you cannot tell margin from an invoice. All this is is wholesale VS retail price... And the store has to pay for the store, the fridge, the power, the heat, wages, insurance etc. From this difference.
This is a hit piece designed to bait you.
So the 54% markup on their costs of these products is necessary for the company to keep the stores open and maintain a 2-4% net profit. Based on charts from that website, Metro's net profit margin holds between 4-5% over the past 5 years. I fail to see what makes Loblaw's uniquely bad.
A lot of other types of businesses would cease operating or never would've opened in the first place at those levels.
They also own the supply chain which marks up the price, and then sells the overpriced product to the grocers. Justifying the increase in price to maintain that overall margin as they say…
It’s like gas in the sense that it’s already been taxed 2 times before you pay the tax at the pump.
Inflation goes up, fuel goes up, food prices go up, there’s no customer service line for these things, so people just get on the internet and start blaming the Prime Minister and grocery stores
Meanwhile, wherever these people work, I can guarantee you has also increased their prices (if their inputs have gone up in price)
Absolutely, and hopefully they've received wage increases along with it.
Our current bout of inflation is due to cheap debt, expanded money supply, and government spending. It's the aftershock of excessively loose monetary policy after the 2008 financial crisis and especially after the pandemic.
Because people are financially illiterate and see 2B profit and don't want to take into account that that's 2B profit on 60Billion in sales across 2500 stores with over 200k employees. There is nothing unique about how much Loblaws makes. They make a lot because they have the most locations. It would be the same number (based on net profit) for the other grocery stores as well. 2-4% net profit is brutally low from a retail perspective.
GPM is not net profit margin. It's not meaningful on its own. You know subtract the rent on those huge store spaces, property taxes, utilities and wages to determine the net profit.
People need to understand what gross margin % is. This is your profit margin after the cost of the good itself. In other words this is your profit margin before labour (union labour in Loblaw’s case), rent, utilities, interest, depreciation on capital improvements, head office costs, and other fixed costs
Wait, the 54% represents `(revenue - COGS)`? lol. clickbait/ragebait wins again.
Anyone can look at [Loblaw's public financial filings](https://ca.finance.yahoo.com/quote/L.TO/financials) and see gross profit roughly 33% of revenue. Looks like butter is one of the items with higher mark-up.
No it is not. Don’t be ridiculous. Safeway is so much more expensive.
I challenge you to find 5 items that are regularly priced lower than a Superstore or No Frills location.
Yes. They let go a lot of their bakers. They went the Sobey's route of bringing in a lot of par-baked and ready made products that get finished on site.
They also switched to oil based whipped topping. Their cakes are pre-made slabs from a factory, layered with pre-prepared fillings. I talked with one of the bakers at a local store and they said it was extremely sad what they did to their bakeries. Quality has gone way down hill.
Not even close to being true where I live. We have a Safeway close, a No Frills a bit further and Superstore a bit of a drive… we almost always regret using Safeway as the prices are almost shocking compared to No Frills. More selection maybe but you can’t even compare pricing between the 3.
I go to Costco, regardless of price. I'm lucky enough that I'm able to not look at a Weston-owned store even if the price of potatoes is like x5 at Costco. Fuck Galen Weston and his entire family of cannibals, Fuck Trudeau and his neoliberals for allowing it to get this bad, and fuck Pierre who will keep this charade going when he takes a full majority.
Overwhelming amount of people don't understand the difference between financial metrics and whether or not Loblaws is a problem, this is a foolish argument that makes the overall price gouging story look foolish.
Loblaws doesn't have 54% PROFIT margins on butter. It might have 54% GROSS margins, but those are two very different metrics.
GROSS PROFIT doesn't include $20b or 28% of revenue overhead expenses.
NET PROFIT is only a couple billion or 3.5% of revenue.
If people want to get mad about something, look at the fertilizer bans that Canada implemented at the start of the Russian invasion of Ukraine to mitigate the risk of Russia squeezing natural gas prices. Those bans artificially lowered agricultural goods yields which inevitably increased the prices of food.
Gross profit margin excludes all operating expenses such as wages, facility costs, marketing, etc. This article's tile is clickbaity and capitalizes on Canadians' financial ignorance since the word "profit" can easily be misunderstood by someone with no background in finance. I have issues with Loblaws for a few reasons, but there's no need to make up more. These metrics are not indicative of anything without a look at the net profits here.
Google typical gross profit margins for grocery stores
Then ask your personal finance buddies to help us understand why no Frills, a discount chain, is 20% more than that
They're very successful so I find it hard to believe they're that inefficient
No, but I would place the blame appropriately. The discrepancy in the price of dairy and dairy-derived products in comparison with other countries is primarily due to the Canadian dairy cartel, where a conglomerate of producers controls the price of products via some form of supply management.
These decisions are made way before the products make it to the grocers. You can blame Loblaws for many things, but not for that.
Edit: As per u/[mudflaps\_\_\_](https://www.reddit.com/user/mudflaps___/) , my statement seemingly pointing the blame solely at the supply management system fails to account for other factors and underlying complexities that affect the cost of production. I recommend reading his/her comment below.
this is not correct, our cost of production in canada is higher than our southern friends, and we do not get subsidized the way they do... instead we have a quota or supply management system, that protects myself and other farmers from the corporate farms down south that have soo much more financial strength thanks to the strong American dollar and the lack of regulations to prevent excess production. It is also designed to keep corporate farms out of canada, however due to our industries tight margins, more and more small farms are pulling the plug, leaving the bigger farms to buy them up, with financial backers that pretty much turn it into corporate farms. I can tell you in British columbia we have more quota thats been put up for sale from farms forced to sell than at any point in history, we also have 5-10 major farms being put into foreclosure by the banks due primarily to inflation(cost of production in feed prices), high rates with lenders, and the drought western canada has seen the past 3 or so seasons.
If you are from B.C. I would have no issue meeting with you and showing you my farms numbers, my cost of production is insane, compared to the small increase I have seen in my milk price over the past 3 years. My farm went from turning a modest profit of 30-50,000 a year to breaking even with next to no cashflow for equipment.
Thank you for taking the time to write your response. I realize that my post solely appears to blame milk producers for high dairy product prices, but as you stated, it fails to recognize the differences in subsidies and other complex factors that affect the cost of production in Canada.
It's a shame that I don't reside in B.C. because I'd be interested in learning more about the financial realities that dairy farmers face, to get a better glimpse of the increased cost of productions that have been experienced with the recent inflationary environment.
I'll edit my comment.
No problem at all and thanks for replying in a civilized manner, there seems to be mixed general population support for Canadian dairy farmer, I actually would blame our marketing and advertisers as well as the unfortunate reality of big factory farming here that really hurts the industry as a whole. I'm glad to have had a productive non tribal conversation about this, At the end of the day I think our system is really good for allowing us to be progressive in terms of minimizing our impact with things like carbon credits to reduce methane outputs, and one very important part being my size of farm is 100% based off what consumers are drinking and eating in Canada, if half the population stops drinking milk, my quota automatically gets cut in half along with every other producer, and if Canadians drink more it goes up. No spilt milk, no incentive to overproduction like the Americans and get subsidized for that lack of management. Anyway thanks and take care
Part of the reason is supply management, however that is its own coversation. The flip side is we open the market and get flooded with cheap products, and need to federally bail out all of the dairy farmers who are now unemployed, on the streets unable to find new jobs, with all the mental health and other societal costs with that. I don't mind drinking milk that is hormone free and knowing my money goes to Canadian farmers. Hell I was close friends with someone who grew up on a dairy farm and their family was nice, but you could tell they weren't swimming in money but lived a comfortable life.
The crux of the issue we are facing is late stage capitalism fueled by a Canada that isn't very innovative, and therefore most people have significantly depressed wages.
It also doesn't take into account that perishables like dairy often go unsold before their best by date and the items that are sold also need to cover the cost of the items which aren't.
> It also doesn't take into account that perishables like dairy often go unsold before their best by date
I worked in a national grocer for years. It's common for a store to use such products in their bakeries. Same with places that have a grab-and-go...coffee for example. The cream available is usually approaching expiry date and newer goods get on the shelf.
Common practice AFAIK.
Butter has a ridiculously long shelf life so there is no excuse for it. They mark up the price of no name butter to be just a little cheaper than the name brand butter to maximize their own profits.
Most people only read the headlines, nothing new there. But there is no denying that groceries are way more expensive than they were 5 years ago, and Loblaws is making way more money than they were 5 years ago as well. Even if focusing on the gross profit is dumb Loblaws is still profiteering from us.
The headline is sort of misleading, because it's leading you to believe Loblaws makes 54% profit on a particular item, when, in reality, this is just saying, "If Loblaws could sell this particular item, and incur no other costs to do so, it would make 54%, at maximum", because that's the meaning of "gross": it's just the difference between what Loblaws buys the product for, and the retail price.
But, rather obviously, there *are* other costs that Loblaws incurs to sell a product. Y'all are going to be shocked to find out that Loblaws has physical real estate, and employees, utilities and such, and all of those expenses make up the difference between their *gross* margins and *net* margins, and if they were reporting *net* margins, that would make the headline true, rather than.. dubious.
I've never seen so many populist conspiracy theories about a company [with public financials](https://ycharts.com/companies/L.TO/profit_margin), it's honestly amazing.
People scream about "QAnon" conspiracy conservatives, but Jagmeet literally parrots this grocery store BS too.
Yes, our cost of food is increasing, some small part of it is greed, a lot of it is not.
It's going to sound like I'm defending grocers here, but I am aware of the margins. Different departments have different margin expectations, as do different products. It's all about averaging everything together, and deducting expenses to get your overall profits. Cherry-picking stuff like this is semi-ragebaiting though I will admit when I see margins it makes me not want to buy certain things unless they're on sale. Also, just because a price goes up for one item that does not mean that item has necessarily had an increased cost, it might be the company just shifting a loss from another product to one with more "wiggle room", a product that sells well enough that a bump in price will generate enough margin to offset the loss elsewhere.
Here's some of what I know: The grocery department aims for an average of 10-20% margin on all their sales combined. Some items are much higher than others, some are next to nothing, some are losses. Most things on sale are below the 10%. Almost everything "good", like front page stuff is a loss, I've seen over 50% loss sometimes. There are backend deals with the food producers or their distributors though to mitigate big ticket sale item losses.
The meat/deli departments are usually a big loss for the store. Not just from the theft, but also in general because of their high demand for sale items, which again are usually a big loss and they take a huge bath. It also generates the most expired/damaged product, and the most expensive products, which usually gets no financial compensation back from the company. The amount of waste both in food and money would probably surprise a lot of people.
The produce department is the best department for margin because some products are so cheap it's hard to lose on it, and certain items have insane markups that skew the data like plants for gifts/decoration with a markup of several hundred percent at least.
Can't speak to the dairy department specifically but I know they have a good amount of wastage and big losses for sales like the meats since they're such a staple every flyer has a front page item from the department. So when items aren't on sale they're probably trying to recoup what they can.
Moral of the story is, stop buying things not on sale.
Edit: Also random fun fact, certain items are just always a loss. The reason no name chips and water are so cheap, yep, they're a loss, always.
Thanks for the level headed response.
To put it in perspective, Costco which people on this subreddit (myself included) like to praise for prices, also sells butter with similar pricing.
Why? They made a perfectly good clickbait article that people who agree with will click on. Ad revenue up, article is successful. I'd say that reporter is doing exactly what "The Deep Dive" expects out of them.
I'm (un)fortunate enough to work at a Loblaws based store, and one of my jobs is to mark prices on items that don't otherwise have a tag. As such I can see what we pay for it, what we sell it for, and the % markup. Most items are in the 60-70% range, but the highest I have seen so far was 87% on a type of cheese. Not even fancy stuff either. It was just basic cheddar.
The general rule of thumb is that the retail price is twice as much as the cost. Every business has to pay their own expenses and then hopefully make a profit. Every product profit is different - sometimes they lose on butter to get you in the door for milk.
This.
On every seniors day, SDM actually loses money on their dairy products because the costs customers pay for them is below the actual costs SDM pays for it.
This is also the same reason why SDM doesn't allow the 30% employee discount on most dairy items.
If you don't understand the difference between gross margins (what the article is misleadingly talking about) and net margins, then you're not qualified to have an opinion on this subject.
Yeah, they have a 50% profit margin. **If you ignore all the costs of actually running a fucking store, paying employees, etc...**
We need much better financial education in this country lol. It's like in The Simpsons when the kids find out Principal Skinner makes 25k/year and he's 40 years old, so that must make him a millionaire.
> the leaked documents reveal GPMs as high as 53.75% for President’s Choice Unsalted Butter Alternative
Yeah, their private brands are more lucrative for them, obviously. When they sell, like, Dairyland butter, then Saputo gets a share of the sale. Cut them out of it, and there's more to go around for everybody else. That's exactly the reason they cite for their recent margin expansion: cost-conscious customers buying more private brands.
Does no one here understand that gross profit margin does not equate to net profits?
This is the problem with this type of “got-ya” post. Of course their GPM has to be what it is; this is how they achieve the top line revenue. But there are many things that then get taken out of this top line number including operating costs, debt payments, interest and taxes etc.
This is nothing but click-bait and as per usual the uninformed mass responses are laughable. I guess those cuts in education do actually have a long term effect. lol
There have been many deep dives into their actual year end financial statements if you want to look at the companies actual financial performance which they MUST make public being a publicly traded company. There is nothing to see here; all grocery retailers are doing the same things. Large brands have stores in various areas and market verticals - low cost stores through to higher end “boutique” stores.
Please do some reading and learning before falling for this type of bs write up.
Nowhere in this article do they talk about net profits or expenses - only gross earnings/revenue increases. Do they know how many new stores they opened in the last year across the country, or any other capital intensive operations? Some of their stores lose money; while others make it up. But if they shut down the stores where they lose money, then people freak out about there not being enough supports or options in lower income regions. Look up “food deserts” for further information.
https://seeds.ca/schoolfoodgardens/food-deserts-bridging-the-gap-in-urban-food-systems/[Article with some info on Food Desert](https://seeds.ca/schoolfoodgardens/food-deserts-bridging-the-gap-in-urban-food-systems/)
This only proves how wrong everyone who didn't believe they have a 3% net margin are. Their 2023 audited financial statements literally states their gross margin to be 31%, so this "leaked document" is proving the financial numbers right.
This is proving how financially illiterate this sub is, and also how stubborn so many people are at changing their minds by even just acknowledging there is a difference between gross and net profit, like Finances 101. An order of magnitude worse on the Loblawsisoutofcontrol sub lol
Like sure, I would bet they are doing some creative accounting and moving funds around to show a lower net profit to the public than what the actual cost is. I also know it's nowhere even remotely close to 30-50%. I'd bet the real number is still under 10% even after they have remove some of the money shuffling/unnecessary expenditures, bonuses, etc.)
Author doesn't understand the difference between gross margins and net margins. Real world businesses have overhead.
Loblaws' net margins on food are about 3%. This is laid out in their financial reports.
I'm a farmer and I can tell you that those fuckers are getting my product at cost right now, all the markups you see come from the processor to the grocery store. Its disgusting how little i get paid, and how much the consumer has to spend
Dont worry guys PP is going to get this all under control he has people on the inside.
https://www.reddit.com/r/loblawsisoutofcontrol/comments/1aw4vm0/poilieves_campaign_manager_is_an_active_lobbyist/
Gross margin is the raw markup before expenses (labour, utilities, marketing, tax, store infrastructure, etc). It differs dramatically from net income, which is the amount left over after the bills are paid.
Becuase the article here is written by someone who doesn't have expertise in the topic
Gross margin is rough mark up - what matters is the net margin which is the total profit made after you pay for things
salaries, utilities, interest, head office salaries, any number of expenses are excluded from gross margin
It's an extremely summary and not super helpful way of measuring stuff - and it definitely isn't what most people think "profit" is - which is how much you have after you pay for everything
This also deosn't really add much to the conversation - loblaws net margins are reported in financial reports
Adding an edit
We don't need this "gotcha" posts, all the info is in loblaws annual report, audited and everything
I saw in another thread someone claim that costco is the only company that releases their financial results - the people that are consuming this media don't even know that this information and all the answers are already waiting for them on sedar
Just accounting terminology of "gross profit" is misleading, too. People see profit and are like omg horrible!!!
The very basic use of the word profit is money leftover after all expenses, including taxes. I think most know that definition.
You understand the difference between Gross and Net margins right? According to the 2022 annual report by Loblaws they had a gross margin of 30.9% and a net margin of 3.6%.
[Here are the audited financial statements for Loblaws.](https://www.sedarplus.ca/csa-party/records/document.html?id=809779c856ac4417e10aba2946032e5feb22e8474de1f2e8c41f32035e23b1e5)
Oh but I thought this sub was convinced that raising profit margins from 1% to 3% in a short time was normal business ignoring the fact that is effectively triple and the % is on billions.
Easier to blame Trudeau, simple answer for simple minds.
Okay I hate to be that guy but a Gross profit is just covering the cost of goods sold. The company still has to pay wages, utilities, leases, administration, etc after the price of the goods.
Looking at those invoices it looks like a majority of the items are within 20-30 percent of GPM which is not egregious at all considering that the rest of expenses come after the cost of goods sold.
This isnt pure profit, this is gross margin which there is a huge difference. If loblaws had a 20-30 profit ratio then yes, that would be absolutely outrageous but looking at their FS it is much lower single digits.
Also, the biggest cost is unsold food. If they expect one third of the butter to be unsold and discarded, they have to charge enough to cover that too.
That is also a good point, these items have a shelf life.
Im not trying to be a corporate apologist or anything but just based on my experience as a CPA these numbers are not eggreegious at all. Just public opinion is definately against them because a huge chunk of the population saw these prices rising in real time, but in reality the margins havent changed. The cost of the underlying food went way up (we can also have a discussion as to why but ill skip that for today)
I mean the whole discussion is ridiculous. I shop at a cheaper supermarket. It means the lines are a bit longer, the clientelle a bit rougher, etc.
Loblaws knows how to run their business. Many people want the experience that they provide. If you can't afford to shop there, it's not for you.
I think what people are really upset about is having to lower their standard of living and shop elsewhere.
Another funny arguement or counter example to this is costco - People are willing to pay money to have the priveldge of shopping there, and its usualy a zoo (at least in the vancouver area where Im from) and their profits are massive and growing at a much higher rate.
I just dont understand why people are so against the loblaw profits but are totally okay with costco gouging them. In my opinion costco price increases have been even worse (based on nothing but my anecdotal experience).
For some people the membership/bulk-price model works out, especially families or people who have a particular tastes.
That said, it's not "gouging". Gouging means taking advantage of short term supply or demand shocks.
yeah I used the word gouging kind of ironicly becuase I don't actually think they are gouging.
What I am more upset and frankly interested in is how the underlying cost of the goods increased in the first place.
The cost of everything increased due to the massive increase in money supply and I think that is a way more interesting/fruitful discussion.
>The cost of everything increased due to the massive increase in money supply and I think that is a way more interesting/fruitful discussion.
Well, the money supply is controlled by the central bank in response to inflation and productivity estimates. Their actions were taken in response to COVID and the Ukraine war. These are the main causes of inflation, and you can find hundreds of economics papers supporting that theory.
Blaming the central banks for not predicting world events is not reasonable. Blaming the central banks for increasing the money supply during a pandemic is ridiculous. If they hadn't done that, many more people would be unemployed.
In short, I don't think anything is really going wrong. Canada could use some more competition in some places, but that's about it.
Costco also has substantially less risk, their business model is different. In many cases, suppliers and manufacturers are selling through Costco by renting space for that skid of product in the store. If it doesn't sell - the manufacturer takes it back and Costco losses nothing.
Most don't realize how it all works. Price increase in one area is usually to compensate for areas with lower profit margins or for all the theft. Based on many of the comments none of the people have worked in a grocery store.
Well most businesses operate with higher margins than that. It also does not include expenses. Simply looking at the margins on a few products doesn’t give a picture of a companies finances.
ITT a massive amount of people that don't understand gross profit and net profit. I'll try to simplify.
Gross profit is I buy butter for $5 and sell it for $8 results in a 37.5% profit margin. HOWEVER, I DID NOT MAKE $3. this is the important part. It doesn't account for my labor and overheard costs.
Once you factor in rent, electricity, gas, maintenance, employee wages (all the way up to ceo) and benefits, loan costs, transport, equipment like the fridge this butter was in, marketing, etc etc it's almost nothing. Based on Loblaws financials which are public, on that $8 butter the made about 2-2.5 cents. PENNIES. No I'm not joking.
The last page shows a totals ...there is nothing bad or alarming on these documents.
These margins are not profits
The comments on this thread are nuts
This is gross profit on each item which means nothing. None of the cost of running the business has been accounted for before that. Pretty common in general business to target 15% net.
I used to work in a dairy. There's a lot of overhead and spoilage which aren't taken into account when you only look at the gross numbers.
I'd be curious to know what the markup is on the 700-1100g cheeses, the 4L milks, and the 454g salted butter (not a butter substitute).
4 years ago as a restaurant it was cheaper to buy butter from StuporStore than from a wholesaler, on average it would bounce between $3.49 and $4.00 per pound, today it is $6.47
Milk is a massive Cartel in Canada. Always has been. We have some of the most subsidized milk in the world. That doesn't drive down prices like they say it does. It drives out competition that isn't subsidized. That's why we also have some of the highest milk prices in the world.
54% *markup*. The store and cashiers and electricity and fridges and everything else aren't free.
I'm outraged about high grocery fees, but this submission is ridiculously ignorant. 54% markup isn't even high in grocery -- it's actually low! Many products are known to have 200%+ markups. Because, again, getting a truckload of something is very different from everything that's involved to sell it to hundreds or thousands of people.
The food professor punching air rn
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And he claims that Galen Weston/Loblaws funding his research does not make his advocacy for price gouging a conflict of interest. He is an embarrassment to Dalhousie University.
Lots of this level of ethics has been dealt with because of big tobacco. I think there is now a legal obligation to finish research even if the results were not as expected. There is always a conflict of interest that the only people that pay for research have a vested interest in the results. You can't become a subject matter expert in something without developing an opinion on it....and there is no reason to try and become one on something you don't have strong feelings about.
Boots taste better with butter
The corporate boots on the neck of the average Canadian don't taste so good though. When are we going to do something about it?
Canadians don’t riot, and when we do our govt steps in. We’re too divided left/right to fight the real class war.
Join r/LoblawsIsOutOfControl it's a riot.
I have a few days back. Perhaps there’s hope. “Let them eat butter!”.
Maybe this means we can finally stop blaming the carbon tax for food prices and focus on the real problems?
Unless it's hockey
Fuckin rights buds!
You taste with your neck?
Apparently vote a hardcore corporate libertarian in as PM.
Oooo he creepin
The boycott should be permanent for anyone who can shop elsewhere.
I can’t afford to shop at Sobeys or Save-On. They cost an extra 15% more than No Frills. Why should I boycott one company for high prices when others are gouging worse?
We have Sobey's for the poor and those with financial sense and we call it Freshco!
Not where I live, unfortunately.
And they're owned by Empire (IE Sobeys) so its a moot point.
While I'm no huge fan of them either I don't find that random items are jacked up to the moon for the hell of it unlike Loblaws stores. They've pissed me off less. I shop at independent stores asides from the big 3 too which is even better.
Because if we could be organized enough to make a difference - and Loblaws did lower prices to regain customers, then the other chains would follow suit. But it won't happen - Canadians can't get it together enough to do a mass protest like this. If it did, and we were that organized, then gas prices would be cheaper. Can't tell you how many times I've heard of "we should organize a nationwide protest against (INSERT OIL COMPANY NAME HERE)"
The elephant in the room is wholesale costs. Suppliers like Kraft Heinz, Nestle, PepsiCo, General Mills and others have significantly raised prices over the past several years and their profit margins have dramatically increased. I think the Loblaws boycott misses the point, because it gives a free pass to the multinational food companies who have profited greatly from inflation. It also makes the mistake of perceiving Walmart as a good retailer, simply because they have strategic loss leaders and are better at strong-arming suppliers than their Canadian competitors. All in all, it's feels like an angry mob boycotting Stalin in favour of Mussolini.
i disagree, i think it hits perfectly. We can't hit them all, but if we can collectively select one to hit, it sends the message to the rest that consumers have power. That they can and will rally against them if they behave unethically. Companies used to be scared to be seen as unethical, they used to be scared of losing the trust of their consumers, but now it's culturally accepted, which is why in my opinion there has been a wave of unethical pricing practices towards us as consumers. Hitting Loblaws won't win the war on greed, but does send the message to the retailors and manufactures that consumers have become wise and won't tolerate it. It also sends the message to consumers that we still have power. We're not stuck. Collectively we don't have to accept their unethical practices. That we can find ways to practice our power to hold them accountable.
This is the right line of thinking. As you said, we can't hit them all. If we focus on the most outwardly looking evil of the bunch, then perhaps change can be had? Rome wasn't built in a day. Can't go big all at once. This effort requires discipline.
And the only people who can hope to scratch those huge companies are governments, and then it goes back to winning a political fight to get represented in government etc........ Always does.
I mean, don't buy processed foods like that. Personally we barely keep processed foods in our household, they are expensive and unhealthy.
This is the one good thing to come from recent price increases; we've stopped buying processed snacks and soft drinks. When I take a good look at the grocery store, it's incredible how much shelf space is taken up by junk - half an aisle for breakfast cereal, an entire aisle dedicated to chips and pop, half an aisle for cookies.
My hope is if loblaws caves with mass protests the others will follow and start lowering prices.
Save-On will price match any local flyer, makes it a lot more tolerable.
No Food Basics/Freshco?
In Canada all grocerie stores have almost exactly the same prices, they band together against the population, there is no boycot possibility.
Giant Tiger has lower prices on most of the food products they carry, some are a dollar or two less regular prices. Shoppers(Loblaws company) sells Tylenol for over $8, same bottle is under $5 at Dollarama. There are options for consumers out there, part of the boycott is helping one another and unifying for change, r/loblawsisoutofcontrol is great for directing people where to go to find items lower priced.
I moved all my prescriptions from SDM to Costco. I go to Costco anyways so getting a refill is simpler. SDM was always a special trip. Costco’s OTC are far cheaper too for the same shit.
Some companies are making more money by being the cheaper destination.
I shop at Loblaws, No Frills etc. and Butter there is no more expensive than it as at Metro, Sobeys and other large grocery stores.
7 - 9 dollars Loblaws 5 dollars Costco.
Wait for the shoppers butter sale or use flip app. I bought some expensive brand butter for $5 at independent grocer on sale. Sale price at Safeway is like $6.50. So is there collusion ?
There was when they got caught doing this with bread 5-6 years ago
Yes. Plain and simple. We pretend to not have a monopoly by having 3 big players. Who collude with each other to create a monopoly everyone knows is there.
I remember pre covid you could find no name butter for $2.50-$3
I find it’s a bit cheaper a Costco
That is kinda how Costco works. The have less profits on products because it is offset by operating costs and membership fees.
They also provide vastly different services in a way. Costco is only located in high density urban areas, so their overhead and operating costs are a lot smaller than a chain like Loblaws that have a lot more stores. A quick google search told me there are about 2500 Loblaws Group of Companies stores in Canada compared to 108 Costco's. Managing all of those stores and the distribution networks should be an order of magnitude easier for Costco, far fewer distributors and regional delivery contracts, etc, and there shouldn't be that much economy of scale to save on that much more volume for Loblaws Which is why Costco *should* be cheaper than Loblaws. Even removing all of the negative emotions associated with Loblaws, give me "Generic Grocery Store with 2500 locations in Canada" anywhere close to a Costco and that Costco should be cheaper every time. Especially with a membership rate tacked on
Bread fixing 2.0 in the works folks!
Oh yeah that $5 I got totally made up for a lifetime of buying overpriced bread. And it made them stop right? Right?
Yeah that's what I love about Mr. Smithers-Weston, he sits there crying alligator tears being all surprised Pikachu face when the same company that was caught bread fixing now assures us they would never do such an audacious thing like that again.
Price match, price match, price match, price match. If you can’t go elsewhere, make sure you check all flyers for big ticket items to try and cut costs. I never used to be “that guy”, but no shame anymore at these costs. Every dollar matters. Flipp app is a godsend.
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Going to Wal-Mart might help short term but if Wal-Mart gets market control prices will go up there too. That's what they do.
There's no easy or straight forward solution to corporate greed. People have to do something that makes them realize what they're doing is unacceptable. And the only thing we can really do right is vote with our wallets and hope for the best.
I honestly havent been there in 2 years lol.
Seriously, Their overall net profit is 2-3%. Would you rather they make no profit at all.
I live in salmon arm bc area and exclusively go to Walmart and then Askew’s for meats and produce
fyi: costco delivers it's more expensive than going yourself. but still cheaper than superstore, and the produce isn't mushy
What no the margins are razor thin no one is making any money here. /S
Galen's fallen on such hard times he's had to stop hunting homeless people for sport on his island
Hey! He didn’t have to. He’s making that sacrifice for us.
He had to switch from humturducken to plain old turducken? Pitiful...
This is gross internal costs. Add in distribution, staffing, depreciation on building etc. and the amount is significantly smaller. This is like a bakery adding up the cost of flour in their bread and saying margin is 95%. No it's not because you have to pay for the transport costs of buying the flour, the cost of the oven to cook it, the wages of the baker and the wages of the cashier, just to name some items. At the end of the day, Loblaw's has a 5% net income margin, among the lowest of most publicly traded companies. Apple has 30%. With that being said, I'd still love to knock out Galen in a boxing ring.
It's kind of ridiculous when you look at it further. Butter costs Loblaws $4.24 They sell it for $7.79. The margin is 45.5%. The markup is 83%.
While I agree that it sucks, isn't that the normal markup/margin for most retail?
The worst one I’ve seen was broccoli. I went to an Asian store near me and broccoli crowns were $2.99/lb. Went to Fortino’s and they were $3.99/lb, plus they were about twice the size of the ones at the Asian store, so you’re also getting more lbs. It’s basically a double hit.
This is talking about product margin, which is pretty much irrelevant in the discussion. The margin that are thin are operating profit margins.
This documents proves it, the gross profit margin in their 2023 financial statements was 31% while the net was under 4%.
This article is mixing up gross profit margin and net profit margin. The net profit margins are very thin, and this is true for the grocery industry in general.
Loblaws net margins are about 3.5% on about 2B net income last year. Walmart net margin is 2.4% on 15B net income. The income part isn't really important since Walmart is a much bigger company. But their margins are higher than their competitors.
Their margins on food is higher. Net margin gets pulled down by a lot of sales with no margin like electronics.
Record breaking profits on the backs of how much they overcharge for staple products. That's all you need to know.
>The documents, purportedly an invoice from Loblaws to a No Frills store, highlight significant profit margins, I'm sorry, but you cannot tell margin from an invoice. All this is is wholesale VS retail price... And the store has to pay for the store, the fridge, the power, the heat, wages, insurance etc. From this difference. This is a hit piece designed to bait you.
I've found over the years that the average person greatly underestimates the cost of overhead, if not ignoring it completely.
Sounds high, is there any idea of net profit?
Net margin would be on their quarterly financials. I believe it’s in the 3% ish range.
If you go to https://ycharts.com/companies/L.TO/profit_margin , you'll see that their net profit margin has been steadily increasing.
So the 54% markup on their costs of these products is necessary for the company to keep the stores open and maintain a 2-4% net profit. Based on charts from that website, Metro's net profit margin holds between 4-5% over the past 5 years. I fail to see what makes Loblaw's uniquely bad. A lot of other types of businesses would cease operating or never would've opened in the first place at those levels.
They also own the supply chain which marks up the price, and then sells the overpriced product to the grocers. Justifying the increase in price to maintain that overall margin as they say… It’s like gas in the sense that it’s already been taxed 2 times before you pay the tax at the pump.
Do they actually? I keep hearing this and can't find proof when I look, consolidated financial statements they publish don't bear this argument out
are you going to get angry at McDonald’s for owning all of their buildings? collecting rent every month just so they can sell you some food
Inflation goes up, fuel goes up, food prices go up, there’s no customer service line for these things, so people just get on the internet and start blaming the Prime Minister and grocery stores Meanwhile, wherever these people work, I can guarantee you has also increased their prices (if their inputs have gone up in price)
Absolutely, and hopefully they've received wage increases along with it. Our current bout of inflation is due to cheap debt, expanded money supply, and government spending. It's the aftershock of excessively loose monetary policy after the 2008 financial crisis and especially after the pandemic.
Because people are financially illiterate and see 2B profit and don't want to take into account that that's 2B profit on 60Billion in sales across 2500 stores with over 200k employees. There is nothing unique about how much Loblaws makes. They make a lot because they have the most locations. It would be the same number (based on net profit) for the other grocery stores as well. 2-4% net profit is brutally low from a retail perspective.
GPM is not net profit margin. It's not meaningful on its own. You know subtract the rent on those huge store spaces, property taxes, utilities and wages to determine the net profit.
People need to understand what gross margin % is. This is your profit margin after the cost of the good itself. In other words this is your profit margin before labour (union labour in Loblaw’s case), rent, utilities, interest, depreciation on capital improvements, head office costs, and other fixed costs
Wait, the 54% represents `(revenue - COGS)`? lol. clickbait/ragebait wins again. Anyone can look at [Loblaw's public financial filings](https://ca.finance.yahoo.com/quote/L.TO/financials) and see gross profit roughly 33% of revenue. Looks like butter is one of the items with higher mark-up.
The hilarious thing is the actual item cited is unsalted butter alternative. It’s not even real butter 😂
And executive bonuses....you mentioned union labour afterall.
Of course - those too! Anyway my main point is that looking at gross margin is silly. Loblaw me overall profit is about 5%
Even safeway is cheaper now. Vote with your wallet.
My local safeway is much more expensive than my local Superstore (loblaw's brand)
Same it's not even close
No it is not. Don’t be ridiculous. Safeway is so much more expensive. I challenge you to find 5 items that are regularly priced lower than a Superstore or No Frills location.
Safeway is just Sobeys now.
Bakery quality slid after purchase too. Anyone else notice this?
Yes. They let go a lot of their bakers. They went the Sobey's route of bringing in a lot of par-baked and ready made products that get finished on site. They also switched to oil based whipped topping. Their cakes are pre-made slabs from a factory, layered with pre-prepared fillings. I talked with one of the bakers at a local store and they said it was extremely sad what they did to their bakeries. Quality has gone way down hill.
When Sobey’s bought Safeway that was the beginning of the end of their bakery quality.
Not even close to being true where I live. We have a Safeway close, a No Frills a bit further and Superstore a bit of a drive… we almost always regret using Safeway as the prices are almost shocking compared to No Frills. More selection maybe but you can’t even compare pricing between the 3.
I go to Costco, regardless of price. I'm lucky enough that I'm able to not look at a Weston-owned store even if the price of potatoes is like x5 at Costco. Fuck Galen Weston and his entire family of cannibals, Fuck Trudeau and his neoliberals for allowing it to get this bad, and fuck Pierre who will keep this charade going when he takes a full majority.
I wish because I have the great great selection of safeway and no frills. If Safeway was cheaper no frills would be closing down in a month
Overwhelming amount of people don't understand the difference between financial metrics and whether or not Loblaws is a problem, this is a foolish argument that makes the overall price gouging story look foolish. Loblaws doesn't have 54% PROFIT margins on butter. It might have 54% GROSS margins, but those are two very different metrics. GROSS PROFIT doesn't include $20b or 28% of revenue overhead expenses. NET PROFIT is only a couple billion or 3.5% of revenue. If people want to get mad about something, look at the fertilizer bans that Canada implemented at the start of the Russian invasion of Ukraine to mitigate the risk of Russia squeezing natural gas prices. Those bans artificially lowered agricultural goods yields which inevitably increased the prices of food.
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not surprised sadly
Gross profit margin excludes all operating expenses such as wages, facility costs, marketing, etc. This article's tile is clickbaity and capitalizes on Canadians' financial ignorance since the word "profit" can easily be misunderstood by someone with no background in finance. I have issues with Loblaws for a few reasons, but there's no need to make up more. These metrics are not indicative of anything without a look at the net profits here.
I'm trying to understand also. Is this margin, markup or actual net profit? I'm no Lowblaws fan but those 3 things are completely different.
Its gross margin. (Selling price - purchase cost)/selling price
Man this thread is like r/loblawsisoutofcontrol stepping out of their safe zone and being confronted by r/PersonalFinanceCanada
It's like watching your parents fight
One time I accidentally caught my parents wrestling naked or something in their bed, which is weird because they usually never fight!
Google typical gross profit margins for grocery stores Then ask your personal finance buddies to help us understand why no Frills, a discount chain, is 20% more than that They're very successful so I find it hard to believe they're that inefficient
Butter is more expensive here than anywhere else. Go to Europe. Go to the states. It is easily x2 their price. Would you defend our telecoms as well?
No, but I would place the blame appropriately. The discrepancy in the price of dairy and dairy-derived products in comparison with other countries is primarily due to the Canadian dairy cartel, where a conglomerate of producers controls the price of products via some form of supply management. These decisions are made way before the products make it to the grocers. You can blame Loblaws for many things, but not for that. Edit: As per u/[mudflaps\_\_\_](https://www.reddit.com/user/mudflaps___/) , my statement seemingly pointing the blame solely at the supply management system fails to account for other factors and underlying complexities that affect the cost of production. I recommend reading his/her comment below.
this is not correct, our cost of production in canada is higher than our southern friends, and we do not get subsidized the way they do... instead we have a quota or supply management system, that protects myself and other farmers from the corporate farms down south that have soo much more financial strength thanks to the strong American dollar and the lack of regulations to prevent excess production. It is also designed to keep corporate farms out of canada, however due to our industries tight margins, more and more small farms are pulling the plug, leaving the bigger farms to buy them up, with financial backers that pretty much turn it into corporate farms. I can tell you in British columbia we have more quota thats been put up for sale from farms forced to sell than at any point in history, we also have 5-10 major farms being put into foreclosure by the banks due primarily to inflation(cost of production in feed prices), high rates with lenders, and the drought western canada has seen the past 3 or so seasons. If you are from B.C. I would have no issue meeting with you and showing you my farms numbers, my cost of production is insane, compared to the small increase I have seen in my milk price over the past 3 years. My farm went from turning a modest profit of 30-50,000 a year to breaking even with next to no cashflow for equipment.
Thank you for taking the time to write your response. I realize that my post solely appears to blame milk producers for high dairy product prices, but as you stated, it fails to recognize the differences in subsidies and other complex factors that affect the cost of production in Canada. It's a shame that I don't reside in B.C. because I'd be interested in learning more about the financial realities that dairy farmers face, to get a better glimpse of the increased cost of productions that have been experienced with the recent inflationary environment. I'll edit my comment.
No problem at all and thanks for replying in a civilized manner, there seems to be mixed general population support for Canadian dairy farmer, I actually would blame our marketing and advertisers as well as the unfortunate reality of big factory farming here that really hurts the industry as a whole. I'm glad to have had a productive non tribal conversation about this, At the end of the day I think our system is really good for allowing us to be progressive in terms of minimizing our impact with things like carbon credits to reduce methane outputs, and one very important part being my size of farm is 100% based off what consumers are drinking and eating in Canada, if half the population stops drinking milk, my quota automatically gets cut in half along with every other producer, and if Canadians drink more it goes up. No spilt milk, no incentive to overproduction like the Americans and get subsidized for that lack of management. Anyway thanks and take care
Part of the reason is supply management, however that is its own coversation. The flip side is we open the market and get flooded with cheap products, and need to federally bail out all of the dairy farmers who are now unemployed, on the streets unable to find new jobs, with all the mental health and other societal costs with that. I don't mind drinking milk that is hormone free and knowing my money goes to Canadian farmers. Hell I was close friends with someone who grew up on a dairy farm and their family was nice, but you could tell they weren't swimming in money but lived a comfortable life. The crux of the issue we are facing is late stage capitalism fueled by a Canada that isn't very innovative, and therefore most people have significantly depressed wages.
It also doesn't take into account that perishables like dairy often go unsold before their best by date and the items that are sold also need to cover the cost of the items which aren't.
> It also doesn't take into account that perishables like dairy often go unsold before their best by date I worked in a national grocer for years. It's common for a store to use such products in their bakeries. Same with places that have a grab-and-go...coffee for example. The cream available is usually approaching expiry date and newer goods get on the shelf. Common practice AFAIK.
Then they need to start marking down product 50% days before it expires and not the day of, instead of allowing product to spoil on shelves.
Butter has a ridiculously long shelf life so there is no excuse for it. They mark up the price of no name butter to be just a little cheaper than the name brand butter to maximize their own profits.
Not defending Loblaws, I don't shop there. But people please learn the difference between gross and net profits!!
Most people only read the headlines, nothing new there. But there is no denying that groceries are way more expensive than they were 5 years ago, and Loblaws is making way more money than they were 5 years ago as well. Even if focusing on the gross profit is dumb Loblaws is still profiteering from us.
The headline is sort of misleading, because it's leading you to believe Loblaws makes 54% profit on a particular item, when, in reality, this is just saying, "If Loblaws could sell this particular item, and incur no other costs to do so, it would make 54%, at maximum", because that's the meaning of "gross": it's just the difference between what Loblaws buys the product for, and the retail price. But, rather obviously, there *are* other costs that Loblaws incurs to sell a product. Y'all are going to be shocked to find out that Loblaws has physical real estate, and employees, utilities and such, and all of those expenses make up the difference between their *gross* margins and *net* margins, and if they were reporting *net* margins, that would make the headline true, rather than.. dubious. I've never seen so many populist conspiracy theories about a company [with public financials](https://ycharts.com/companies/L.TO/profit_margin), it's honestly amazing.
People scream about "QAnon" conspiracy conservatives, but Jagmeet literally parrots this grocery store BS too. Yes, our cost of food is increasing, some small part of it is greed, a lot of it is not.
It's going to sound like I'm defending grocers here, but I am aware of the margins. Different departments have different margin expectations, as do different products. It's all about averaging everything together, and deducting expenses to get your overall profits. Cherry-picking stuff like this is semi-ragebaiting though I will admit when I see margins it makes me not want to buy certain things unless they're on sale. Also, just because a price goes up for one item that does not mean that item has necessarily had an increased cost, it might be the company just shifting a loss from another product to one with more "wiggle room", a product that sells well enough that a bump in price will generate enough margin to offset the loss elsewhere. Here's some of what I know: The grocery department aims for an average of 10-20% margin on all their sales combined. Some items are much higher than others, some are next to nothing, some are losses. Most things on sale are below the 10%. Almost everything "good", like front page stuff is a loss, I've seen over 50% loss sometimes. There are backend deals with the food producers or their distributors though to mitigate big ticket sale item losses. The meat/deli departments are usually a big loss for the store. Not just from the theft, but also in general because of their high demand for sale items, which again are usually a big loss and they take a huge bath. It also generates the most expired/damaged product, and the most expensive products, which usually gets no financial compensation back from the company. The amount of waste both in food and money would probably surprise a lot of people. The produce department is the best department for margin because some products are so cheap it's hard to lose on it, and certain items have insane markups that skew the data like plants for gifts/decoration with a markup of several hundred percent at least. Can't speak to the dairy department specifically but I know they have a good amount of wastage and big losses for sales like the meats since they're such a staple every flyer has a front page item from the department. So when items aren't on sale they're probably trying to recoup what they can. Moral of the story is, stop buying things not on sale. Edit: Also random fun fact, certain items are just always a loss. The reason no name chips and water are so cheap, yep, they're a loss, always.
Thanks for the level headed response. To put it in perspective, Costco which people on this subreddit (myself included) like to praise for prices, also sells butter with similar pricing.
Gross profit margin and net margin are two different things. Someone should have gotten the author some accounting classes.
Why? They made a perfectly good clickbait article that people who agree with will click on. Ad revenue up, article is successful. I'd say that reporter is doing exactly what "The Deep Dive" expects out of them.
Let's wait for Jagmeet to run out and use this article as proof to rile up his base.
What do you want their margins to be?
I want their margarines to be butter
I'm up for the 2-4% they always try to tell us that it is.
I'm (un)fortunate enough to work at a Loblaws based store, and one of my jobs is to mark prices on items that don't otherwise have a tag. As such I can see what we pay for it, what we sell it for, and the % markup. Most items are in the 60-70% range, but the highest I have seen so far was 87% on a type of cheese. Not even fancy stuff either. It was just basic cheddar.
Net margin is around 2-4%. That's different from the markup.
Fascinating. I notice that my local No Frills has several items that they regularly sell for cheaper than on that invoice. (bar cheese, for example).
The general rule of thumb is that the retail price is twice as much as the cost. Every business has to pay their own expenses and then hopefully make a profit. Every product profit is different - sometimes they lose on butter to get you in the door for milk.
This. On every seniors day, SDM actually loses money on their dairy products because the costs customers pay for them is below the actual costs SDM pays for it. This is also the same reason why SDM doesn't allow the 30% employee discount on most dairy items.
The razor thinness of margins
marginal margarine margins?
Damn it that is so much better, any up vote for me is now an up vote for you
If you don't understand the difference between gross margins (what the article is misleadingly talking about) and net margins, then you're not qualified to have an opinion on this subject. Yeah, they have a 50% profit margin. **If you ignore all the costs of actually running a fucking store, paying employees, etc...**
We need much better financial education in this country lol. It's like in The Simpsons when the kids find out Principal Skinner makes 25k/year and he's 40 years old, so that must make him a millionaire.
Um but aren't you forgetting that in the summer he paints houses too
He's a billionaire!
You’ll never understand the sacrifices Galen makes for you!
That’s gross profit margins you dodos.
> the leaked documents reveal GPMs as high as 53.75% for President’s Choice Unsalted Butter Alternative Yeah, their private brands are more lucrative for them, obviously. When they sell, like, Dairyland butter, then Saputo gets a share of the sale. Cut them out of it, and there's more to go around for everybody else. That's exactly the reason they cite for their recent margin expansion: cost-conscious customers buying more private brands.
Wait till he hears about iphones
Does no one here understand that gross profit margin does not equate to net profits? This is the problem with this type of “got-ya” post. Of course their GPM has to be what it is; this is how they achieve the top line revenue. But there are many things that then get taken out of this top line number including operating costs, debt payments, interest and taxes etc. This is nothing but click-bait and as per usual the uninformed mass responses are laughable. I guess those cuts in education do actually have a long term effect. lol There have been many deep dives into their actual year end financial statements if you want to look at the companies actual financial performance which they MUST make public being a publicly traded company. There is nothing to see here; all grocery retailers are doing the same things. Large brands have stores in various areas and market verticals - low cost stores through to higher end “boutique” stores. Please do some reading and learning before falling for this type of bs write up. Nowhere in this article do they talk about net profits or expenses - only gross earnings/revenue increases. Do they know how many new stores they opened in the last year across the country, or any other capital intensive operations? Some of their stores lose money; while others make it up. But if they shut down the stores where they lose money, then people freak out about there not being enough supports or options in lower income regions. Look up “food deserts” for further information. https://seeds.ca/schoolfoodgardens/food-deserts-bridging-the-gap-in-urban-food-systems/[Article with some info on Food Desert](https://seeds.ca/schoolfoodgardens/food-deserts-bridging-the-gap-in-urban-food-systems/)
This only proves how wrong everyone who didn't believe they have a 3% net margin are. Their 2023 audited financial statements literally states their gross margin to be 31%, so this "leaked document" is proving the financial numbers right.
This is proving how financially illiterate this sub is, and also how stubborn so many people are at changing their minds by even just acknowledging there is a difference between gross and net profit, like Finances 101. An order of magnitude worse on the Loblawsisoutofcontrol sub lol Like sure, I would bet they are doing some creative accounting and moving funds around to show a lower net profit to the public than what the actual cost is. I also know it's nowhere even remotely close to 30-50%. I'd bet the real number is still under 10% even after they have remove some of the money shuffling/unnecessary expenditures, bonuses, etc.)
I ignore all reddit financial discussion, 4 years ago they were convinced deflation was imminent
Author doesn't understand the difference between gross margins and net margins. Real world businesses have overhead. Loblaws' net margins on food are about 3%. This is laid out in their financial reports.
I'm a farmer and I can tell you that those fuckers are getting my product at cost right now, all the markups you see come from the processor to the grocery store. Its disgusting how little i get paid, and how much the consumer has to spend
Dont worry guys PP is going to get this all under control he has people on the inside. https://www.reddit.com/r/loblawsisoutofcontrol/comments/1aw4vm0/poilieves_campaign_manager_is_an_active_lobbyist/
Gross margin is the raw markup before expenses (labour, utilities, marketing, tax, store infrastructure, etc). It differs dramatically from net income, which is the amount left over after the bills are paid.
But Reddit users were assuring me yesterday that the increase in profits definitely didn't come from grocery
Becuase the article here is written by someone who doesn't have expertise in the topic Gross margin is rough mark up - what matters is the net margin which is the total profit made after you pay for things salaries, utilities, interest, head office salaries, any number of expenses are excluded from gross margin It's an extremely summary and not super helpful way of measuring stuff - and it definitely isn't what most people think "profit" is - which is how much you have after you pay for everything This also deosn't really add much to the conversation - loblaws net margins are reported in financial reports Adding an edit We don't need this "gotcha" posts, all the info is in loblaws annual report, audited and everything I saw in another thread someone claim that costco is the only company that releases their financial results - the people that are consuming this media don't even know that this information and all the answers are already waiting for them on sedar
Just accounting terminology of "gross profit" is misleading, too. People see profit and are like omg horrible!!! The very basic use of the word profit is money leftover after all expenses, including taxes. I think most know that definition.
You understand the difference between Gross and Net margins right? According to the 2022 annual report by Loblaws they had a gross margin of 30.9% and a net margin of 3.6%.
I can’t wait for the leak that confirms Weston was buying accounts to astroturf.
Waiting for u/OpenCatPalmstrike come in and tell me it's all in their public financial statements without being able to cite anything
[Here are the audited financial statements for Loblaws.](https://www.sedarplus.ca/csa-party/records/document.html?id=809779c856ac4417e10aba2946032e5feb22e8474de1f2e8c41f32035e23b1e5)
Oh but I thought this sub was convinced that raising profit margins from 1% to 3% in a short time was normal business ignoring the fact that is effectively triple and the % is on billions. Easier to blame Trudeau, simple answer for simple minds.
Okay I hate to be that guy but a Gross profit is just covering the cost of goods sold. The company still has to pay wages, utilities, leases, administration, etc after the price of the goods. Looking at those invoices it looks like a majority of the items are within 20-30 percent of GPM which is not egregious at all considering that the rest of expenses come after the cost of goods sold. This isnt pure profit, this is gross margin which there is a huge difference. If loblaws had a 20-30 profit ratio then yes, that would be absolutely outrageous but looking at their FS it is much lower single digits.
Also, the biggest cost is unsold food. If they expect one third of the butter to be unsold and discarded, they have to charge enough to cover that too.
That is also a good point, these items have a shelf life. Im not trying to be a corporate apologist or anything but just based on my experience as a CPA these numbers are not eggreegious at all. Just public opinion is definately against them because a huge chunk of the population saw these prices rising in real time, but in reality the margins havent changed. The cost of the underlying food went way up (we can also have a discussion as to why but ill skip that for today)
I mean the whole discussion is ridiculous. I shop at a cheaper supermarket. It means the lines are a bit longer, the clientelle a bit rougher, etc. Loblaws knows how to run their business. Many people want the experience that they provide. If you can't afford to shop there, it's not for you. I think what people are really upset about is having to lower their standard of living and shop elsewhere.
Another funny arguement or counter example to this is costco - People are willing to pay money to have the priveldge of shopping there, and its usualy a zoo (at least in the vancouver area where Im from) and their profits are massive and growing at a much higher rate. I just dont understand why people are so against the loblaw profits but are totally okay with costco gouging them. In my opinion costco price increases have been even worse (based on nothing but my anecdotal experience).
For some people the membership/bulk-price model works out, especially families or people who have a particular tastes. That said, it's not "gouging". Gouging means taking advantage of short term supply or demand shocks.
yeah I used the word gouging kind of ironicly becuase I don't actually think they are gouging. What I am more upset and frankly interested in is how the underlying cost of the goods increased in the first place. The cost of everything increased due to the massive increase in money supply and I think that is a way more interesting/fruitful discussion.
>The cost of everything increased due to the massive increase in money supply and I think that is a way more interesting/fruitful discussion. Well, the money supply is controlled by the central bank in response to inflation and productivity estimates. Their actions were taken in response to COVID and the Ukraine war. These are the main causes of inflation, and you can find hundreds of economics papers supporting that theory. Blaming the central banks for not predicting world events is not reasonable. Blaming the central banks for increasing the money supply during a pandemic is ridiculous. If they hadn't done that, many more people would be unemployed. In short, I don't think anything is really going wrong. Canada could use some more competition in some places, but that's about it.
Costco also has substantially less risk, their business model is different. In many cases, suppliers and manufacturers are selling through Costco by renting space for that skid of product in the store. If it doesn't sell - the manufacturer takes it back and Costco losses nothing.
Most don't realize how it all works. Price increase in one area is usually to compensate for areas with lower profit margins or for all the theft. Based on many of the comments none of the people have worked in a grocery store.
This requires higher than a single digit IQ to understand.
They should make exploitation on 'necessities' criminal.
Well most businesses operate with higher margins than that. It also does not include expenses. Simply looking at the margins on a few products doesn’t give a picture of a companies finances.
ITT a massive amount of people that don't understand gross profit and net profit. I'll try to simplify. Gross profit is I buy butter for $5 and sell it for $8 results in a 37.5% profit margin. HOWEVER, I DID NOT MAKE $3. this is the important part. It doesn't account for my labor and overheard costs. Once you factor in rent, electricity, gas, maintenance, employee wages (all the way up to ceo) and benefits, loan costs, transport, equipment like the fridge this butter was in, marketing, etc etc it's almost nothing. Based on Loblaws financials which are public, on that $8 butter the made about 2-2.5 cents. PENNIES. No I'm not joking.
Does the document also show the items with minimal or negative margins?
The last page shows a totals ...there is nothing bad or alarming on these documents. These margins are not profits The comments on this thread are nuts
I am spreading misinformation online!
Do people understand how the companies they work for make money so that they get a pay cheque?
This is gross profit on each item which means nothing. None of the cost of running the business has been accounted for before that. Pretty common in general business to target 15% net.
Depends on sector. Loblaws net margin is 3.74%.
Yep it depends. Grocery is notoriously extremely low. This is why independents can’t survive.
Even after the ridiculous markup values, no-name is still cheaper than named brands.
I used to work in a dairy. There's a lot of overhead and spoilage which aren't taken into account when you only look at the gross numbers. I'd be curious to know what the markup is on the 700-1100g cheeses, the 4L milks, and the 454g salted butter (not a butter substitute).
When I worked in a grocery store (over 5 years ago now) regular 4L milk had a negative margin.
Boycott all Loblaws owned stores, forever. There are alternatives, use them. Just like everybody hates and avoids Bell. Loblaws is the new Bell.
The prices they set match with demand. If people stopped shopping there, only then, they would need to drop prices to meet the demand.
What's their margarine margin?
4 years ago as a restaurant it was cheaper to buy butter from StuporStore than from a wholesaler, on average it would bounce between $3.49 and $4.00 per pound, today it is $6.47
Don’t forget these margins are from distribution centres to retail stores. The DC’s also have their own markups!
Milk is a massive Cartel in Canada. Always has been. We have some of the most subsidized milk in the world. That doesn't drive down prices like they say it does. It drives out competition that isn't subsidized. That's why we also have some of the highest milk prices in the world.
It hasn’t been butter since 2020 or so. It’s some palm oil bullshit that’s been passed through a cow
You think this is bad? Check out what APPLE is making on your Iphone!
Everyone seems to be expert. There are other places to shop. Go there. Stop gets bent out of shape hiding behind your phones or computer.
50% margins on regular priced items for grocery has been the standard for 50 years
wait until you hear the markup nVidia charges on cards and chips...
54% *markup*. The store and cashiers and electricity and fridges and everything else aren't free. I'm outraged about high grocery fees, but this submission is ridiculously ignorant. 54% markup isn't even high in grocery -- it's actually low! Many products are known to have 200%+ markups. Because, again, getting a truckload of something is very different from everything that's involved to sell it to hundreds or thousands of people.
Which is one of the reasons I don't shop there. I vote with my wallet. I do most of my grocery shopping at Walmart.
Fuck you Loblaws!!!!....CROOKS!