Walmart Canada Open to Grocery Code of Conduct, CEO Informs MPs
Walmart Canada’s CEO, Gonzalo Gebara, has announced the company’s willingness to cooperate with other major grocers in developing a grocery code of conduct. This marks a change from Walmart’s earlier stance against such a measure. The code aims to establish an even playing field between suppliers and retailers.
Gebara, appointed as Walmart Canada’s president and CEO in December, informed the House of Commons agriculture committee that the company is reviewing a draft of the proposed code.
Support for Transparency and Fair Conditions
Gebara said Walmart now supports any initiative promoting transparency and better conditions throughout the supply chain.
The grocery code of conduct, initiated during the COVID-19 pandemic in 2020, came after Walmart Canada introduced new supplier fees to counterbalance a $3.5-billion investment in its stores and e-commerce business. Loblaw Companies, Canada’s largest grocery corporation, also imposed new supplier fees that year.
Code of Conduct to Impose Fair Practice Standards
The code will enforce fair practice standards for retailers and suppliers, ensuring transparency and potentially imposing financial penalties on non-compliant companies.
Previously, Walmart Canada claimed that such a code was unnecessary and defended its fee structure.
Addressing Food Inflation
Gebara’s appearance before the committee comes amid ongoing double-digit food inflation in Canada. In February, grocery prices increased by 10.6% compared to a year ago, while overall inflation was 5.2%.
Gebara maintained that Walmart Canada is not exploiting food inflation for profit, citing a decline in operating profit and gross profit margins for the company’s food business in recent years.
Walmart International’s Net Sales Growth
Walmart’s overall profit margin dropped to 3.3% for the 2023 fiscal year, down from 4.6% the previous year. However, the company’s international net sales, led by Canada, China, Mexico, and Central America, grew by 2.1% to US$27.6 billion in the fourth quarter of 2023.
Gebara did not disclose specific figures for Walmart’s Canadian operations and revenues but confirmed that the relevant financial data has been submitted to the Competition Bureau, which is investigating whether grocery chains are profiting from inflation.
Striving for Competitive Pricing
Walmart Canada aims to maintain a price gap between its products and those of its competitors, focusing on its “everyday low price” strategy.
To combat inflation, Gebara said the company is controlling operating costs, identifying supply chain improvements, and working to keep prices low on private-label products.
Comments Follow Testimonies from Other Grocery Chains
Gebara’s statements followed testimonies from the leaders of Canada’s three largest grocery chains on March 8. The CEOs and presidents of Loblaw Cos. Ltd., Metro Inc., and Empire Co. Ltd. argued that food inflation is not due to profit-seeking and insisted that their margins on food have remained low.
