Agriculture Committee on March 27th, 2023

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Okay. Walmart owned Asda in the U.K. and sold it in 2021. Your company has experience with a grocery code of conduct in the U.K.

Can you tell me what Walmart's experience was in the U.K.?

[Gonzalo Gebara]

I don't have enough information to share what the situation was in the U.K. relating to the code of conduct, Mr. Epp.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Your company would have that. Would you be willing to table a response to that question on behalf of Walmart?

[Gonzalo Gebara]

The ways we have engaged ourselves with codes of conduct are very particular to each of the different markets, Mr. Epp. I don't know that we would have enough information to share with you, but let me take that back.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

Some observers have noted that retail food prices can be—in a term often used—“sticky”, when it comes to adjusting them downwards. I know Walmart prides itself on every day low pricing, but they seem to react faster on the way up. Can you comment?

[Gonzalo Gebara]

In my opening remarks, I made a reference to our EDLP philosophy, which is much more than just a commercial line. Our philosophy is to always be the last one to go up and the first one to go down, in terms of prices. We also, as I said, are very fanatical about operating at low costs and streamlining the supply chain network, so we can pass the savings on to our customers.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Epp.

Thank you, Mr. Gebara.

I will now turn to Mrs. Valdez for five minutes.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

Thank you, Mr. Chair.

Thank you, Mr. Gebara, for joining this committee.

I'm looking at Walmart's profit. This was published by Walmart directly. It has e-commerce growth at 17% or 18%, on a two-year stack. There was an increase in international sales, and Canada was ranked as one of the top consumers.

The first thing I want to establish is how many of these sales came from food, either in dollars or as a percentage.

[Gonzalo Gebara]

Mrs. Valdez, our business has grown, as I mentioned earlier, over the last several years, in very particular conditions during a pandemic. As you know, our sales numbers in Canada are competitively sensitive. As I said earlier, we shared the relevant information with the bureau so that it can continue its analysis.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

There are often discussions about the compensation of CEOs of large grocery chains. Do you know the ratio of, or gap between, executive salaries and the average salary of non-executives in Walmart stores?

[Gonzalo Gebara]

Again, as I stated earlier, we believe we have very well-balanced and competitive pay in all the different structures of our business. Individual pay, by level of responsibility, is also sensitive information that I'm not in a position to share right now.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

What is Walmart's priority, when it comes to providing basic necessities to Canadians? Is it to make the most amount of profit possible, or to provide Canadians with the basic necessities at an affordable cost?

[Gonzalo Gebara]

Our purpose, as I stated in my opening, is to help people save money so they can live better. All we do, every day, is chase that purpose and ambition. We do so by streamlining our processes. We do so by investing in technology, training and development across our organization, and we do so by investing in growth and new capabilities. We work, every day, to provide Canadians with low prices so they don't have to choose between the items they want and the prices they can pay.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

Thank you.

I'm sharing this because Canadians, especially constituents with whom I've spoken in my riding, feel that billion-dollar corporations such as Walmart only seem to care about making a profit, not so much about providing the basic necessities to survive at an affordable cost.

During the COVID pandemic, some chains increased the wages of grocery workers. In view of high inflation, some have instituted price freezes on their brands.

What initiatives of this kind have been implemented by Walmart?

[Gonzalo Gebara]

First of all, let me say, one more time, that Walmart Canada is not part of the narrative of record profits during this time of inflation. As I said earlier, we decreased our profits last year, compared with the previous year.

The other thing I'll say is that we conduct our business and engage with suppliers in many different ways—in a very transparent and arm's-length way—so we can deliver on that promise and purpose while saving Canadians money so they can live better.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

My last question is this: I recently saw an article reporting that Walmart was overcharging customers as a result of a price-scanning error. In some cases, the misrepresentation of the cost was about 5% to 10% more. This is where the price on the shelf doesn't match the price at a register.

Could you elaborate on this?

[Gonzalo Gebara]

For any error we can have at the register, we have a very strict practice and policy. That needs to be corrected at the cash register immediately, so we can comply with the prices we show on the shelf. We have different technology. We continue to invest to minimize those price errors so that we can continue to run a very trustworthy and transparent business with our customers.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mrs. Valdez.

We'll now turn to Monsieur Perron for two and a half minutes, please.

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

Thank you, Mr. Chair.

Since the beginning of the meeting, Mr. Gebara, you've been saying that you are in favour of great transparency. However, with all due respect, I would say that your answers have been less than transparent. You said that your profit margin on food items was lower than your profit margin on all your other items. Can you give us an idea of that percentage in relation to all of your products?

[Gonzalo Gebara]

Again, our business comprises different categories. I will repeat that our food margins are lower than general merchandise margins, but that is competitively sensitive information.

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

Thank you, Mr. Gebara. I see that I'm not going to get an answer to that question.

You alluded to the fact that the fees you charge suppliers are used to develop your infrastructure. What were you able to pay for using that money? When you asked suppliers to reduce their profit margins in order to fund your infrastructure, what did you spend the money on?

[Gonzalo Gebara]

We have announced a program to invest $3.5 billion in the Canadian market related to growth and growth opportunities. Those investments are going to come in the form of new technology for our omnichannel business. It will come in the form of improving and investing in our supply chain network so that we can have the network ready for the new and modern ways that Canadians shop, whether online or in the stores. We have invited—

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

That was yet another overly general answer.

I'm going to switch topics. Earlier, Mr. MacGregor talked about your employee wages. If any of your employees wanted to unionize, would you support that? Would you ever agree to the unionization of Wal‑Mart employees?

[Gonzalo Gebara]

As I said, our people are the most important thing we have in our organization. We engage with our associates in ways that provide a very safe and great environment for them. At the same time, we respect—