Good afternoon. Thank you, Mr. Chair.
I'm the senior vice-president of the Canadian Federation of Independent Grocers. I would like to thank the committee for the invitation to participate in your hearings this afternoon.
Independent grocers across Canada serve a myriad of communities in this country, particularly rural, remote and indigenous communities in which we are the only source of food for people in those areas. As such, independent grocers are a critical linchpin in ensuring food security for much of the country. Independents account for about $18 billion in sales and there are approximately 6,900 independent grocery stores across Canada.
We compete on a landscape that is overly consolidated at the retail, wholesale and supplier levels in a number of categories. At the same time, our members operate on overall margins of an average 1.5%, and that is much lower than other retail sectors. To stay on that uneven playing field, independents must differentiate themselves, and they do so by buy buying local, hiring local, supporting local initiatives and living in the communities they serve.
There is no playbook or manual that exists that could have helped guide the industry through this crisis. In the context of panic buying, labour shortages, the closing of most of the food service business, plus the increases in costs through the entire supply chain, this industry, for the most part, has responded very well by supplying groceries and supplies to Canadians.
That being said, there have been issues around the issue of supply that our members have encountered over the last few months that need to be addressed within industry and government. Independent grocers and independent wholesalers have encountered problems getting access to some products.
We understand that for some products there has been a huge spike in demand, particularly when customers want to buy enough toilet paper to last them for the next two years. However, when our members cannot access poultry, flour, eggs or other essential products, including fair access to PPE, such as hand sanitizers and face masks, then that not only impacts the ability of that independent grocer to continue to stay in business but the ability of those people, especially in more rural and remote communities, to access those essential products. The situation we've experienced has put that at risk and that is unacceptable to us. We hope it would be unacceptable to this committee as well.
Too often, over the past few months, we've had conversations with associations representing supply-managed sectors or companies in the consumer packaged goods areas, and with governments, that were taken aback when we would explain that what they were saying, in terms of supply, was not what our members were seeing. There were two different realities.
There are issues around distribution that need to be addressed and fixed. While panic buying has subsided, we could see a second wave, or at some point, some other pandemic or crisis could again arise. This means we all need to ask what we can learn from the past few months.
This industry, producers, processors and retailers, all responded with dedication and an exemplary commitment to ensuring Canadians had food and essential products. However, there is learning and things we can all do better in the event of another crisis. That includes consumers refraining from panic buying, but it also means wholesalers and suppliers have to ensure there is fair access to products for all retailers.
It also means governments have to ensure there are going to be mechanisms in place that allow our independents to access PPE supplies, both for the protection of their customers and employees. As well, all agriculture and food ministries, federal and provincial, must end their entrenched and systemic preoccupation with on-farm to the exclusion of off-farm. They are fond of slogans such as “gate to plate” or “farm to fork”, but the reality is, and it doesn't matter what party is in power, scant attention is paid to this end of the supply chain.
I would like to conclude by pointing out how the reality for all small and medium-sized businesses has changed and will change as a result of COVID-19. We know this because our members have been open as an essential service. We know what lies ahead for everybody, because we're on that road right now.
Increased costs to enhance consumer and team member safety through rigorous and stringent in-store cleaning, enhanced safety protocols, additional supplies of PPE, including installation of plexiglass barriers, are just some of our new realities. For independent grocers, because we're not part of the on-farm sector, we have received no government financial support unlike other parts of the supply chain.
As well, this committee in particular should be cognizant of the significant migration away from cash on the part of consumers to credit and contactless payments. This has meant, and will mean, a correspondingly significant erosion of the bottom line of most businesses because of the increased percentage they must now pay in interchange fees. Since large chains pay much less in interchange fees as a percentage than small and medium-sized businesses do, this erosion has a disproportionately deeper impact on those without the leverage of a Walmart to negotiate more favourable rates.
It is naive to believe that these billions of dollars siphoned out of the pockets of those SMEs do not have a huge impact on what Canadians pay for goods and services. Of course they do, but with the percentage of credit transactions now so much higher, this will make it a much more difficult journey for many businesses on their road to recovery in the next couple of years.
In the context of COVID-19, we would urge this committee to recommend that the government revisit the current agreement with the credit card companies, yet to go into effect, to reduce fees to an overall average of 1.4%. The payment landscape is much different now. All of us need to work together to put this country back on its feet, and credit card companies need to be part of that solution.
Thank you again, Mr. Chair and members of the committee, for the opportunity to speak with you today. We very much appreciate it.