Loblaw Share Price Goes Up Following Boycott, Weston Wealth Increases by $540mill [Op-Ed]

The alleged anti-Loblaw boycott, primarily called for on social media platforms such as Reddit, where anonymity prevails, reportedly began on May 1. Despite these claims, there has been no discernible change in customer traffic at Loblaw-owned stores—at least not thus far.

Interestingly, the market seems to be largely indifferent to this boycott; Loblaw shares have climbed by nearly $7, reaching an all-time high of almost $154, 3 days after the start of the boycott. This increase in share value has augmented Galen Weston’s wealth by $540 million. Contrary to the boycotters’ intentions to financially impact the Weston family and Loblaw negatively, the opposite seems to be unfolding.

Since the movement did not extend to other chains for the first month—where in some instances, prices have risen more sharply than at Loblaw’s—and since there has been no clear evidence of profiteering by Loblaw, the boycott is likely to fail. From its inception, it lacked logical and practical foundation. Fortunately, Canadians are proving to be more discerning.

Despite this, last week Galen Weston stated that Loblaw was being unfairly accused of profiteering. He was partially correct. While there are no verified, audited reports to substantiate claims of profiteering by Loblaw, it would be incorrect to absolve the company of all blame. Indeed, Loblaw, alongside Walmart, plays a significant role in the challenges facing food manufacturing and independent grocers. Not only is food manufacturing undercapitalized, but independent grocers are also suffering under the dominance of a few large corporations that control over 80% of Canada’s food retail market.

The reality that Canadians are spending less at grocery stores is impacting manufacturing and independent grocers more than major retailers like Loblaw. To protect their margins, Loblaw and Walmart are likely to implement new fees and pressure suppliers to lower prices. Typically, manufacturers respond by attempting to increase prices to compensate for these higher costs imposed by grocers. This ongoing struggle has persisted for years.

A lesser-known fact is that suppliers pay grocers for the privilege of doing business with them, which grants significant power to these retailers within the supply chain. While it might seem beneficial for consumers when grocers force price reductions on suppliers, this can lead to tighter margins for manufacturers, potentially forcing them to shut down.

To safeguard both manufacturing and independent grocers, a code of conduct is essential. This code should be adhered to by all grocers, including giants like Loblaw and Walmart, and would be coordinated by the government and led by the industry to mediate disputes within the supply chain. Currently, manufacturers have little choice but to comply with Loblaw’s terms or cease operations. Many have silently closed their doors because they lacked the ability to protest.

These closures lead to reduced consumer choice and, consequently, less competition. This is the real issue the boycott should have highlighted, rather than adopting a populist stance fueled by collective animosity toward a single company and individual—a truly futile and misguided effort.

Galen Weston’s public grievances have become a recurring theme. We have observed him misleading parliamentarians last year about how the proposed code of conduct would affect prices, for which he later apologized. Nearly a decade ago, he also criticized farmers’ markets by suggesting that the food sold there could pose greater safety risks, a claim he eventually retracted.

While the boycott may be an ineffectual and juvenile attempt to challenge a “Goliath” like Galen Weston, he is incorrect in claiming that Loblaw is being unfairly targeted. The company should indeed be scrutinized, but for legitimate reasons.

Strengthening our grocery industry and making it more competitive will require a broader understanding of supply chain economics among Canadians, extending beyond the storefront. Neither Loblaw nor Walmart are directly exploiting consumers; instead, they are exploiting suppliers, which introduces more price volatility into the market and ultimately harms consumers.

Boycotts are not the solution; instead, we need to rally support for more price stability through a code of conduct for the food industry. Over time, this would help both food manufacturing and independent grocers thrive, making the industry more transparent and Canada a more attractive place for investment once more.

The key to transitioning to a more competitive food distribution landscape is to ensure that both Loblaw and Walmart comply with this new code. Thus, Mr. Weston, rather than lamenting the situation, should take concrete actions to address the real issues affecting Canadians.