TORONTO — The head of Sobeys Inc. says the grocer won’t follow its Canadian competitors in unilaterally hiking supplier fees, calling the practice “hard to believe and repugnant.”
Michael Medline, president and chief executive of Sobeys and its parent company Empire Company Ltd., said the decision by some grocery chains to impose fee increases on suppliers has left consumer goods companies feeling bullied.
“This is the worst relationship I’ve ever seen in my couple of decades in retail,” he told a virtual talk with the Empire Club of Canada on Wednesday.
“I don’t think it’s healthy … some of these behaviours are just plain bad for Canada.”
Loblaw Companies Ltd., Walmart Canada and a national buying group that represents Metro Inc. have said they plan to increase fees.
Medline said the practice of having a small handful of large grocers impose fees on suppliers risks hurting farmers, consumers and “mom and pop” food retailers in Canada.
“We negotiate and communicate and discuss things with our supplier partners,” Medline said. “Sometimes supplier partners aren’t going to like what they hear and sometimes we won’t. But across-the-board goring of each other does not work.”
Medline said he is now open to a code of conduct for the grocery industry.
“I think it’s time that we got together as an industry and had a set of very simple value driven ground rules so that we don’t get in this mess and we have a very healthy food supply chain,” he said.
Medline said the code of conduct would have to be fair and apply to all grocers and suppliers.
“It has to cut both ways,” he said. “Suppliers need to also promise to play fair.”
Walmart Canada announced a fee hike in July that prompted United Grocers Inc., a national buying group that represents Metro Inc., to tell suppliers it expects the same cost reductions as competitors.
Last week, Loblaw Companies Ltd. told suppliers that the cost of getting products on shelves would go up in January.
Citing plans to improve its in-store and digital operations over the next five years, the grocery giant said existing charges for delivery would go up, and a new 1.2 per cent fee would be introduced.
This report by The Canadian Press was first published Oct. 28, 2020.
Companies in this story: (TSX:L, TSX:MRU, TSX:EMP.A)
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