Yahoo Finance Confidence in Loblaws plummets after bread price-fixing scandal
Consumers are less trusting of one of Canada’s largest grocery store chains after a scandal rocked the industry late last year.
In the last three months, consumer confidence in Loblaw’s brand has dropped 10 per cent, according to a study by Dalhousie University’s Faculty of Management.
The study was conducted in November 2017 and March 2018, asking consumers how they felt about grocery store brands, while Loblaw dropped 10 per cent, Sobeys saw an increase in consumer confidence, going up 1.6 per cent.
Overall, consumer trust in the food retail sector dropped 6.3 per cent.
Costco was ranked as the most trustworthy grocer in Canada (although Sobeys ranked slightly higher with women who were surveyed). Walmart ranked the lowest in consumer trust. Loblaws was the most trusted brand for survey participants under the age of 21.
The survey did not ask any questions about price fixing. It asked Canadians whether the retailers live up to their promises and promises of good value, their positive contribution to the local community, their sustainable practices, and the fair treatment of their customers and employees.
“Companies have to think about how they are going to deliver on their ethical and sustainability promises,” said Sylvain Charlebois, food-industry professor and dean of Dalhousie’s faculty of management in a press release.
While the bread price-fixing scandal was not specifically addressed, it likely weighed on the minds of customers after news broke in February that the Canada Bread Company Ltd. and George Weston Ltd. had communicated with grocery stores to raise bread prices at least 15 times in a 14 year period.
In exchange for immunity, Loblaw and George Weston admitted to their involvement in the scheme. Sobeys has remained adamant that it was not involved, and has threatened legal action after it was suggested that the company did participate.
Loblaw began issuing $25 gift cards to customers as an apology and a means of covering some of the overpayment for products, but that too was rife with problems.
“To be honest, I was surprised,” Charlebois said of the survey’s results to The Toronto Star. “I assumed people would have forgotten about the whole affair, that they would have collected their $25 and moved on.”
Loblaw spokesperson Kevin Groh says that the company’s focus now is changing its processes, making sure the situation doesn’t happen again, and getting the gift cards distributed to customers.
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