Are food prices up because of COVID? Are we spending more or less because we’re ordering our groceries online? How much does delivery add to the food bill? And what’s the effect of ordering from Door Dash or Uber Eats? How do we factor in the time we spend standing in line or waiting for delivery? Are we better or worse off?
To start with food prices themselves, and not counting the Chilean or California strawberries you may want on a snowy Estrie January, the pandemic shifted consumer demand, caused slowdowns, closed plants and distribution centres, caused labour shortages and logistics disruptions—all of which drove up food prices. According to Canada’s Food Price Report 2021, expect to pay about 5 per cent more this year than last – if you’re a family of four, that’s about $700 more, unless you shop a lot differently. Meat and veg will go up the most – as much as 6.5 per cent. “While the virus will continue to impact food prices”, the report notes, “those along the food-supply chain learned valued lessons and may be more adaptable to future challenges. For example, grocery retailers are investing more in their e-commerce capabilities.”
Before COVID, hardly anyone ordered food or groceries online. Now, more than 1 out of 5 of us do. It’s hard to say who’s paying more of the added costs involved in changing the supply chain, us or the grocers. All grocers have some version of physical distancing markings on the floor and special sanitizing stations and special hours for seniors and extra cleaning and disinfecting. Says Sylvain Charlebois, a professor of food distribution and policy at Dalhousie University, “Increased operational costs through salaries and stepped-up cleaning measures will hit the bottom line. At a 1 to 2 per cent profit margin, grocery stores have little room to absorb increased costs.”
For sure we consumers are paying part of the cost. If the grocers can’t absorb the costs, they’ll raise prices. There’s no charge to you for shopping online and picking up your groceries, but these are hours you’re not working at whatever you do to make a living. Your “opportunity cost” equals your hourly rate times the number of hours waiting around for the groceries.
Delivery is another story. IGA and Provigo both have a delivery option. Depending on the franchise, IGA will charge between zero and $10. Plus an “assembly” fee – that is, someone in-house to do your shopping for you. Some of Provigo’s stores use the Instacart app. For orders less than $35, the associated fees are $7.99 for 2-hour delivery window ($9.99 for a 1-hour delivery) while for orders over $35, the fees are $3.99 for 2-hour delivery. Costco offers delivery, but only in Montreal, Quebec City and Gatineau. To access deliveries from Épicerie Métro, you’ll need to order at least $50 worth of groceries before taxes. You’ll also have to count $8 as a delivery fee and $4 as an assembly fee – and I’m not sure it’s available in Sherbrooke. For sure, if you’re in a village or small town, you’ll be lucky to have delivery from your local grocer, and it will more likely than not be free. (If you have it, treat that supplier very well.)
Aside from changes in the way we grocery shop, many of us are ordering from restaurants as well. Both Uber Eats and Door Dash are available to deliver in Sherbrooke but not in the boonies where I live. Delivery is free if you order $15 or more, and you’re expected to tip the driver $2-4.
Sylvain Charlebois is not reluctant to venture into predictions. He says it’s likely that grocers will pare down the variety of products they offer – it’s way more expensive to manage 15,000 distinct products than say, 8,000 or 10,000, and who really needs to choose between 8 different brands of peanut butter?
He thinks it’s possible that food retailers will invest in a system of automated micro-fulfilment centres dedicated to serving online ordering.
He sees the advantages of more consumers buying directly from farmers, signing up for subscription-type services to stock up on staples from regional suppliers and supporting niche markets in their neighbourhoods. That’s certainly a sentiment you often hear in the country.
So at the end of this week’s head-scratcher, only you can decide if you’re better or worse off.
For myself, I’m contemplating the fact that Canada is one of the few self-sufficient nations in the world when it comes to food. We produce maybe 2 per cent of the world’s food and consume maybe 1% of it. In most food categories, we import less than 20 per cent of our needs, except for fresh fruits and vegetables.
Says Diane Brisbois, CEO of the Retail Council of Canada, “Our farmers, processors, distributors and retailers haven’t let us down. The availability and affordability we have is not found in many parts of the world.”
Dian Cohen is an economist and a founding organizer of the Massawippi Valley Health Centre.
Cohendian560@gmail.com.
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