Agriculture Committee on Feb. 6th, 2023

[François Thibault]

We told suppliers that we weren't going to accept higher prices during the holiday season, because our teams are busy with marketing and customer service. It's a very busy time of year, so we want to ensure stability in terms of cost and retail price. That's what I meant.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Do you do that every year?

[François Thibault]

I've been with Metro for 10 years, and I can say that we've been doing it for several years.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Okay, thank you very much.

You also talked about your noble objective to provide quality products while keeping your profit margin stable, among other things. You stated that you operate in a competitive market, but in a market where five players hold 80% of the market, is it really a competitive situation for suppliers to sell? If they don't get along with you, they can get along with another grocer, but that could become difficult.

According to Professor Charlebois, this is an oligopoly. What's your opinion on that?

[François Thibault]

Mr. Charlebois is entitled to his opinion. As for mine, I can tell you that it's a very competitive market and that we have to consider several players, including some big U.S. players: Walmart, Costco and others online, like Amazon.

Food products are sold in many stores, including independents. It's a competitive market, and customers have choices, options. If we want to keep our customers, we have to be competitive.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Customers have options, but do suppliers have as many? That was the point of my question.

[François Thibault]

I think there are as many players for suppliers as there are for customers. We're not the biggest player, and we try to compete through tight negotiations. We don't always have the big end of the stick, as we say where I come from.

[The Chair, Liberal, Kody Blois]

Unfortunately, your time is up.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you for your responses, Mr. Thibault.

[The Chair, Liberal, Kody Blois]

Mr. MacGregor, you have the floor.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair.

Mr. Thibault, in our earlier exchange, I used the term a “crisis of confidence”. I think I would also call it a “crisis of trust”. This has not come out of a vacuum. There is a history here.

We know that there were allegations of fixing the price of bread. The Competition Bureau has had to look at the activities of your sector several times. We know from producers and processors—and have heard in this committee in excruciating detail—of the hidden fees and fines that our producers and processors have had to pay to supply your large corporations.

Also, then, we have a parliamentary inquiry into this matter. For the three biggest chains in Canada, not one single head of a company came to publicly defend their company, including today for Metro.

Therefore, there is a crisis of trust and confidence. It did not just begin with this parliamentary inquiry. This parliamentary inquiry is a product of it. This is what we are hearing from our constituents, and we have a history there. Parliamentarians will be proactive on this. I'm not going to presuppose what our recommendations will be, but we do have the power to act, and whether it's strengthening our competition laws or giving more resources to the Competition Bureau, those are options that we have.

My question to you, sir, is this: What is the sector going to do to try to regain that trust? You have to admit that there is a gulf between your companies and the consumer right now. What are you going to do at this moment in time to try to regain that trust and address the crisis in confidence?

[François Thibault]

I firmly believe that customers show their trust. Every day, we do hundreds of thousands of transactions. We have a growing customer base, a growing loyal base. I think we've demonstrated to customers that we provide value, quality and a healthy, secure environment, and we provide transparency. I think we do have the trust of consumers.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

That's it. You think you have the trust at present.

[François Thibault]

Yes, I believe we have the trust of consumers, and we fight every day to gain that trust and keep that trust.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

With respect, that's completely—

[The Chair, Liberal, Kody Blois]

Mr. MacGregor, we'll have to keep it at that, unfortunately.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

—opposite to what we're hearing, but we'll leave it at that.

[The Chair, Liberal, Kody Blois]

We're at the time, but thank you.

I'd like to thank our witnesses.

I'm going to quickly take some of the prerogative of the chair.

Mr. Thibault, I know you're in the CFO role. I appreciate your being here today to provide testimony.

Do you have a sense of how much retail prices on Metro shelves have gone up on average in the last 12 months? Do you have that number for the committee?

I appreciate that it is a question on what's happening across the sector, but do you have a number you can share that you have a sense of? Is it 10%, 12% or 8%? Do you have anything?

[François Thibault]

Throughout fiscal year 2022, it went up every quarter. You have the official CPI numbers published by the government, but what we measure is what the customer is paying at the till. The customer doesn't buy a static index. The customer will take action, switch products and get promotions, etc.

To give you an idea, in the first quarter of fiscal year 2022, our internal inflation was 3.5%. That's how much more we estimate the customer paid than in the previous year. In the second quarter, it was 5%, then 8.5% and then 10%. In our first quarter of 2023, which we just released, it was still 10%.

That's to give you an order of magnitude of the price increases paid by customers.

[The Chair, Liberal, Kody Blois]

That's helpful.

The second piece is that you mentioned 27,000 price increases. I can appreciate there's a lot of back-and-forth with your suppliers on that.

Do you have any numbers you could share? I can appreciate that it would depend on the supplier, but even an average would give us a sense, from your suppliers, of what they're dealing with and what some of their requests are in terms of a percentage increase year over year.

Do you have a number you could share with this committee?

[François Thibault]

Are you saying going forward, or are you saying...?

[The Chair, Liberal, Kody Blois]

You mentioned in your testimony 27,000 requests—

[François Thibault]

That was for fiscal year 2022.

[The Chair, Liberal, Kody Blois]

Yes. Do you have an average of what the ask was in terms of an increase from your suppliers?

Do you have an average you could share?

[François Thibault]

It varied. It was the high single digits to double digits, and sometimes the same supplier came several times during the year. It's across the range.

As I said, we had a backlog of price request increases because of the pause we asked for. Now we have several thousand still to be processed.