Thank you, Mr. Chair.
As the leader of a proudly Nova Scotia-born business that employs 130,000 people across Canada, I want to start by acknowledging the challenges that families in Canada are facing every day to make ends meet. Canadians are facing the highest cost-of-living increase in four decades. Interest rates have been rising steeply and prices on all goods and services have been rapidly increasing. It is no solace to struggling Canadians buying groceries to know that food inflation is a global phenomenon driven by higher commodity and input costs or to know that food inflation in Canada is actually lower than many other G20 countries, including the U.S., the U.K. and Mexico.
Several factors have contributed to the high food inflation Canadians are experiencing, including geopolitical events, product input costs, extreme weather, soaring energy costs and labour shortages. I can assure you, at Empire we are doing everything we can to contain price increases and provide value to our customers during these trying times. We're doing it on paper-thin profit margins of 2.5%.
We believe we are seeing indications of inflation peaking and then abating this spring, but I know this is not an immediate salve for the many Canadians who are struggling financially.
I'd like to make three main points today.
First, I stand by everything shared with you in December by our chief operating officer, Pierre St-Laurent. Most notably, we at Empire are not profiting from inflation. It doesn't matter how many times you say it, write it or tweet it, it is simply not true.
The truth is that we are at the end of a very long food supply chain that has economic inputs at every step and stage. We detest the decisions that inflation is forcing Canadian families to make, which we see in our stores each and every day. We see customers buying fewer items and trading down.
Second, as a grocery retailer we have been playing a major role in trying to minimize food price inflation and we will continue fighting for our customers. Since inflation took off, we have been battling inflationary pressures in our business, including rising costs in products, fuel, labour, energy and construction. So far in 2023 alone, we are seeing the same volume of cost increase requests from the supplier community, with a slight indication the requests are slowing this April.
I am not going to throw our supplier partners under the bus. They are also doing their best in extraordinary times. They are greatly impacted by rising costs, which they are forced, unfortunately, to pass on to retailers. Many of our supplier partners are also dealing with the downstream cost impacts resulting from cost increases on supply chain controlled commodities like milk. We know that groups like the Dairy Commission are facing the same realities that we are with their input costs.
We're heavily investing in our promotional offerings and flyer deals, expanding our private label value options and making shifts in pack sizes to provide Canadian consumers with more value during these difficult times.
The third point I'd like to make is that there are ways government and business can work together to ultimately reduce prices. Empire is happy to partner with government on solutions to fight inflation. Government and business have a collective role to play to contain inflation. I will list five specific examples here as I know the intention of this committee is to gather research and ideas to alleviate the pressure of food prices on Canadians.
First, implement a strong grocery supply code of practice. We were the first major grocer to support this initiative and we continue to be an ardent advocate of a code of conduct to ensure fair practices for all participants in our food supply chain.
Second, reduce congestion at Canadian ports and simplify the flow of goods across borders.
Third, create better economic conditions for food manufacturers and growers to stay in Canada, as so many are fleeing to the U.S.
Fourth, invest in greenhouse farming. We must find a way to reduce our reliance on American fresh foods, to shorten the supply chain and lower costs to Canadians.
Fifth, do everything possible to strengthen the Canadian dollar. Of course, you will have to ensure this doesn't injure other parts of the economy, but it's critical in terms of food pricing.
We would also ask that you look at the entire industry to consider solutions. There are giant American grocery retailers doing business in Canada that were not called to the floor here today. Are they exempt from playing a role in these issues?
We're a proud Canadian company, with 115 years of experience in serving the needs of Canadian families. We have transformed to become a much healthier business than we were just six years ago, which is something that all Canadians benefit from.
It is folly to suggest that an unprofitable grocery business is somehow better for customers and better for shelf prices. Canada needs and relies on a healthy grocery industry. Like all Canadians, we look forward to seeing the end of this tough inflationary period.
Thank you.