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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Sobeysí price cuts on 8,500 items in Quebec could trigger grocery war with Loblaw, Metro

Wednesday, April 06, 2016 > 10:16:59
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(Financial Post)

Sobeys’ decision to slash prices on 8,500 grocery items this week in Quebec stands to trigger a price war with other grocery retailers.

The retailer’s decision to drop prices by five per cent to seven per cent at its IGA stores in the province by Thursday “will require a response” from rivals Loblaw and Metro Inc., said analyst Keith Howlett at Desjardins Securities.

“Both will have to decide whether or not to alter their weighting of everyday regular shelf prices versus promotional discounts” in the province.

The news comes a month after Sobeys announced it was cutting prices on meat and produce at its Safeway stores in Western Canada.

Unlike its main rivals, Sobeys does not have a discount banner in Quebec and executives likely do not want the market share of discounters in Quebec (38 per cent) to increase to the level of success they have in Ontario, where they have a 51 per cent market share, said Howlett.

He views Sobeys’ moves as a negative sign that industry pricing could be “moving toward a period of disequilibrium.”

To balance out the price cuts, Sobeys will offer fewer promotional discounts and has negotiated more favourable discounts from its suppliers.


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