Empire Company Limited is pushing back against supplier requests for tariff-related price increases as renewed Canada-U.S. trade tensions create another potential source of cost pressure for Canadian retailers and consumers.
The parent company of Sobeys, Safeway, FreshCo, IGA, Foodland, Farm Boy and Longo’s says the immediate impact of the latest counter-tariffs on its grocery business has been limited. Chief Customer Officer Luc L’Archevêque told analysts Thursday that fewer than a handful of suppliers have approached Empire with cost increase submissions related to tariffs.
Empire does not intend to accept those increases at this stage.
“Our position will remain the same as the first time around,” L’Archevêque said during Empire’s first-quarter fiscal 2027 earnings call. He said the company will work with suppliers to find solutions that protect customers from tariff-related costs.
The position provides an early indication of how one of Canada’s largest grocery retailers intends to handle the latest phase of the trade dispute. Suppliers facing higher costs will not necessarily be able to pass those increases through to Empire, particularly in categories where alternative products or sources of supply are available.
Empire Sees Limited Tariff Impact So Far
The latest round of Canadian counter-tariffs took effect September 8, applying duties of 15%, 25% and 50% to a range of U.S. imports as trade tensions between Canada and the United States continue.
L’Archevêque said the current situation appears more manageable for Empire than the previous round of trade disruption because fewer product categories are affected. Empire has also had time to improve the tools and processes it uses to respond to tariff-related cost pressures.
“We have some experience now and better tools, so we are going to react faster than the first time around,” he said.
The situation could change if the dispute expands or additional categories become subject to tariffs. Based on what Empire is seeing now, management characterized the direct impact as minimal.
That assessment matters in a grocery market where affordability remains a major concern. Supplier cost increases are negotiated between retailers and manufacturers and can eventually influence shelf prices. Empire is signalling that tariffs alone will not be sufficient justification for higher costs.
Empire Does Not Expect Tariffs to Drive Grocery Inflation
President and CEO Pierre St-Laurent told analysts that Empire does not currently expect the latest tariffs to create inflation across its full-service and discount grocery businesses.
“We are not expecting that will create inflation,” St-Laurent said.
He pointed to Empire’s diversity of supply, particularly its access to non-U.S. products. When individual U.S. products become more expensive or consumers decide to avoid them, Empire can direct purchasing toward other products already available within its network.
The company believes its full-service banners are particularly well positioned because their larger assortments provide more alternatives within individual categories. St-Laurent said Empire’s full-service business performed well during the previous period of trade disruption, when customers were also looking for alternatives to U.S. products.
Empire says it has significant Canadian and international sourcing options and expects the smaller number of affected categories in the current round to make the situation easier to manage.
That also strengthens the retailer’s position in supplier negotiations. Where comparable products are available from other sources, Empire has more ability to challenge a tariff-related increase or shift purchasing elsewhere.
Buy Canadian Sentiment Has Yet to Show Clearly in Sales Data
Trade tensions are renewing consumer interest in Canadian products, although Empire says the shift is not yet clearly visible at the checkout.
St-Laurent said the escalation in Canada-U.S. tensions has increased customer interest in supporting Canadian businesses and products. He pointed to Empire’s Canadian roots, domestic supplier relationships and locally operated banners as advantages if that sentiment continues.
L’Archevêque was cautious about translating that sentiment into actual sales. Empire is aware of increased interest in Canadian products, he said, but it remains too early to see a clear change in point-of-sale data. Management believes Canadian products could see an increase if the current environment persists.
Price remains a major factor. Empire said value, quality and convenience will continue to influence purchasing decisions even as consumers pay greater attention to where products come from.
A sustained shift toward Canadian goods could nevertheless change market share within individual categories. Domestic brands and manufacturers could capture sales from U.S. suppliers without an increase in overall grocery spending.
Affordability Remains the Bigger Consumer Issue
The trade dispute comes as Empire is already responding to consumers who remain highly focused on value.
Management said its internal inflation remained below Statistics Canada food CPI during the quarter, while shoppers continued to make purchasing decisions based on affordability. Empire has been increasing its emphasis on promotions, private label, Scene+ loyalty offers, personalization and larger value-sized products across its banners.
L’Archevêque said private label is performing strongly, with Empire revamping products and packaging across parts of its portfolio. Scene+ membership is growing, and Empire is using the program to deliver personalized offers. The company has also put greater emphasis on value-sized products across its banners.
These initiatives are becoming increasingly important as discount grocery expands across Canada. Empire is growing its FreshCo network while working to improve value perception at conventional banners including Sobeys, Safeway and IGA.
The tariff issue adds another layer to an existing fight for grocery spending. Consumers are already moving between products, brands and banners based on price, giving retailers an incentive to resist another source of cost inflation where alternatives are available.
Assortment Gives Empire Another Lever
The trade dispute could increase the value of assortment as a competitive tool.
Conventional supermarkets typically carry more choices within individual categories than discount stores. When customers want to avoid a particular country of origin, a broader assortment gives them more opportunities to switch products while remaining in the same store.
Empire believes that flexibility helped its full-service business during the previous trade disruption. It does not change the underlying price competition between conventional and discount grocery, but it provides Empire with another way to respond when customer preferences shift.
The effect could also reach suppliers. Manufacturers seeking tariff-related increases may encounter greater resistance in categories where comparable products are readily available, while Canadian producers could gain sales if consumers and retailers shift purchasing away from U.S. goods.
For suppliers with differentiated products and few substitutes, the equation may be different. Empire’s ability to resist cost increases will ultimately depend on the category, available alternatives and how the trade dispute develops.
Empire Says It Is Better Prepared This Time
Empire made the tariff comments as it reported its first-quarter fiscal 2027 results. Food sales increased 1.7% and same-store food sales rose 1.2%, while management described the consumer environment as challenging and highly focused on affordability.
For now, Empire believes the latest tariff exposure can be managed without materially increasing grocery prices. Few suppliers have submitted tariff-related increases, the company says it has substantial sourcing alternatives, and management believes its experience from the previous trade dispute has improved its ability to respond.
The harder test will come if tariffs spread to more categories or remain in place long enough to create costs that suppliers cannot absorb or avoid. Empire’s position at the start of this latest round is clear: before tariff-related costs reach grocery shelves, suppliers should expect the retailer to challenge them.
