Canada is searching for an international grocer to enter its domestic market, after years of anger from shoppers over high food prices, much of it directed at one of the big players. But would an Aldi or a Lidl solve the problem?
Canada is searching for an international grocer to enter its domestic market, after years of anger from shoppers over high food prices, much of it directed at one of the big players. But would an Aldi or a Lidl solve the problem?
Grocery is a low-margin, high-volume business with huge startup costs and not a lot of supplier elasticity. Anyone coming into Canada should not expect to make money for years.
The last attempt was Target, and while they were the architects of their own fate in a lot of ways, even they weren’t planning to be profitable for years.
Aldi or Lidl could come in, but they’d be years lining up real estate leases, suppliers (both food and packaging/ops) all while trying to compete is already-saturated markets, against competitors that are vertically integrated (especially LCL/Loblaw) and already have much of the existing base locked up.
Assuming they even stay around, it’s likely they’d sell out as soon as their shareholders got twitchy about yearly losses.
If the government was serious about competition, trying to bribe a foreign company with billions of dollars would be a huge waste of money. A better option would be either nationalizing one of the existing chains or taxing their owners appropriately, so that they’d stop profiteering and put money back in the business.
One of the reasons billionaires even exist is because we spent the last forty years rejiggering our tax code to allow them to hoard wealth because Art Laffer and his hack disciples convinced Western policymakers that allowing the wealthy to hoard money would someone not result in the wealthy hoarding money, and that it would be a more productive use of capital to let the rich sit on huge piles of cash than to either a) tax it and spend it directly on public services, and/or b) threaten to tax it, forcing the rich to reinvest it or lose it.
Interestingly they’re both actually privately owned. So if they wanted to break into the Canadian market they wouldn’t have the worry of shareholders getting cold feet in the same way a publicly owned company would.
The way it would probably work is they’d wait until their presences in the USA were large enough that they could supply the Canadian operation cross border. Until they had large enough portfolios to make it worth having a proper network in Canada.
Yeah I would imagine that Aldi and Lidl are barley profitable in the USA yet, and they’ve both been in that market for over a decade.
Would breaking them up not be an option?