Loblaw is reviewing price increase requests from suppliers faster than normal because of the impact of potential tariffs on costs.
The grocer normally reviews proposed increases within 12 weeks but has cut that timeline in half to better help suppliers navigate the effects of tariffs, said spokeswoman Catherine Thomas in an email.
The U.S. is set to levy tariffs next week on imports from Canada and the federal government has said it will retaliate, a move that will make many goods coming from the U.S. more expensive.
That means many items at the grocery store, in particular the fresh produce Canada relies on in the winter, could see price increases.
“The goal was to outline to our suppliers steps we can take mutually to navigate potential challenges faced in light of the proposed tariffs from both the U.S. and Canada,” said Thomas.
However, she said Loblaw will do everything it can to reduce the impact of tariffs on customers.
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“There’s still a lot we don’t know, but we’re doing everything we can to lessen possible impacts for both our suppliers and ultimately for customers,” she said.
Loblaw is also looking to boost its supply of Canadian-made products and is making it easier for customers to find domestically made products in-store.
On an earnings call earlier this month, CEO Per Bank said the company was seeing a “significant uplift in sales” of products labelled as prepared in Canada.
He said less than 10 percent of the company’s supply comes from the U.S., mainly produce.
“If tariffs are applied on produce, there’s where we will be mostly impacted,” said Bank.
The weaker loonie is also putting pressure on imports from the U.S., Loblaw said in a report on food inflation released Thursday.
This affects foods directly imported from the U.S. like lettuce and tomatoes, as well as goods from other countries that are priced in U.S. dollars, like some coffee and citrus, the company said.
Amid the pressure, “suppliers continue to seek to pass on their higher costs,” Loblaw wrote in the report.
“While many of these are justified given the current economic situation, we continue to work closely with our suppliers to manage prices for customers but expect this to be a headwind for food prices in the coming months.”
Loblaw and the other grocers came under scrutiny during and after the heights of food inflation, and were accused of unduly profiting from it, which they denied.
On the February earnings call, chief financial officer Richard Dufresne said Loblaw continues to see higher-than-normal price increase requests from large global suppliers.
