University of Guelph food economist Michael von Massow argues against the public grocery store proposal that moved into the mainstream after Avi Lewis campaigned on government-run stores in winning the federal NDP leadership. Lewis and his advisers have suggested public store prices could run 35 to 40 per cent below traditional retailers, but von Massow contends the evidence does not support that.
He argues that grocery retail depends on scale and distribution infrastructure — Loblaws operates more than 2,400 stores, Empire more than 1,600 — and that even large chains earn operating margins of only four to six per cent. A new government chain starting without that infrastructure would need substantial subsidies to deliver the promised discounts. He points to Mexico’s government stores (now roughly 50, less than two per cent cheaper than Walmart) and U.S. military commissaries (about 25 per cent cheaper but subsidized at 25 to 30 per cent of sales) as examples where costs exceed consumer savings.
Von Massow argues the money would be better spent on direct, targeted support, citing the GST/HST rebate, the incoming Canada Groceries and Essentials Benefit replacing the GST/HST credit in July, and the Nutrition North subsidy for remote communities. He concludes that a well-designed voucher program would deliver more value per dollar than building retail infrastructure from scratch. The column is republished from The Conversation.
Reporting by Michael von Massow, University of Guelph, via London Free Press. Reproduced for reference under fair dealing (Copyright Act, s. 29).