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That doesn’t mean everything costs more in Canada, says David Soberman, a professor of marketing and Canadian national chair of strategic marketing at the University of Toronto’s Rotman School of Management. Canadians may pay more than Americans for the same basket of goods, he says, but we pay less than people in some other countries, like Switzerland.
Why do we pay what we do? That’s a difficult question to answer. The reasons are complex and vary depending on the type of good or service. Let’s look at some of the main contributors to Canada’s cost of living, why they are as expensive as they are, and steps you can take to reduce those costs.
Why are groceries so expensive in Canada?
There are a few reasons groceries cost so much in Canada, says Soberman. It’s expensive for companies to ship food products across a country as large as ours, and those costs are reflected in what you pay in stores, he says. But a highly concentrated grocery industry is also a big contributing factor.
Canada’s grocery market is dominated by just a few companies. Domestically, there are three big players: Loblaws, Metro and Sobeys. (Some chains, such as Save-On-Foods in Western Canada, compete on a regional basis.) The next largest retailers for grocery sales are Walmart and Costco. Together, these five companies account for more than three-quarters of all food sales in Canada, according to Canada’s Competition Bureau. In 2023, 49% of Canadians report buying groceries from Loblaws or one of its sister stores.
Critics argue such concentration allows the dominant companies to participate in anti-competitive practices that ultimately harm consumers through higher prices. In grocery, this takes the form of fixing bread prices, preventing competitors from selling certain products, or collectively deciding when to freeze grocery prices—and when to unfreeze them. It’s a problem experts say applies to other industries, such as telecommunications and air travel.
When Canada’s Competition Act was introduced, in 1986, there were at least eight large grocery chains in Canada, each owned by a different company. Since then, more than a dozen major mergers and acquisitions have reduced the level of competition. Today, three big supermarket companies own several smaller chains, including discount brands that could be mistaken for rivals: Loblaws has No Frills, Sobeys has FreshCo and Metro has Food Basics, for example.
How does Canada allow for three big grocers to reign? “The law in Canada typically will not allow the Bureau to intervene in these deals, as they are generally seen as unlikely to have a significant impact on prices and other dimensions of competition,” states a Competition Bureau report. “In the case of a major city or suburb, with five or six different grocery stores nearby, it can be hard to prove that removing one option will cause prices to go up significantly.”
Another underlying issue is that, for many decades, the prevailing view was that “as a small, but large country, we need to accept lower levels of competition to achieve a scale that is necessary to serve the various markets,” says Keldon Bester, executive director of the Canadian Anti-Monopoly Project (CAMP). Over time, that belief has led to fewer and fewer options for consumers, he says.
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Justin Dallaire
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