As supplier of produce and goods, you don’t have much choice now but to deal with one or more of the large retail distribution firms in Canada and the U.S. In recent years the choice of which retail outlets to deal with has greatly narrowed. What the pandemic has highlighted economically is that certain sectors in both countries are basically controlled by a few large companies who make up oligopolies. The Oxford English Dictionary defines “oligopoly” as “a state of limited competition in which a market is shared by a small number of producers or sellers.” Today, as a supplier, one has little choice but to deal with the likes of Walmart, Cosco, Loblaws, Amazon, etc.
These large enterprises in turn are increasing their sales through online ordering, a somewhat costly transition but a necessary one. The pandemic and changing customer preferences for shopping have speeded up this process. In the meantime, these companies have recently introduced new higher supplier fees, arguing that they are intended to help cover the cost of modernization plans, especially those related to improvements in e-commerce and to help pay for upgrades. The introduction of these higher fees set off a prolonged conflict between manufacturers and supermarket chains, a few of which like Loblaws Canada sought to charge similar supplier fees. Walmart for one said the fees were a fair trade-off for suppliers, since the proposed investments would lead to sales growth. Walmart and Loblaws have now set a dangerous precedent in the sector by asking suppliers to help cover the costs of new investments.
It’s understandable that suppliers are enraged by these new fees, wondering why they are being forced to subsidize the likes of Walmart and Loblaws to modernize their businesses. Given the nature of oligopolies and their desire not to increase their retail prices to consumers, what’s frustrating is that the suppliers may not have any choice but to accept the additional costs and reduce their profit margins accordingly. Several may even find it difficult to survive by doing so, including some of the independent grocers. What’s even more frustrating, due to the pandemic’s impact resulting from the frequent closures of medium and small retail businesses, these larger companies have significantly increased their overall profits for the last year. For example, Walmart reported record revenue worldwide of over US$152 billion in the fourth quarter of 2020, a 7.4 percent increase over the previous year.
Governments have legislation regulating “monopolies” which inevitably reduce competition in the economy, affect the normal operations of the free market and increase costs to consumers. Perhaps it’s about time that governments take a closer look at oligopolies as suggested by a number of industry organizations. In addition, maybe corporations like Walmart and Loblaws could reintroduce or increase hazard pay to their employees as long as the pandemic continues. Through the end of 2020, the total additional COVID-19 compensation Amazon and Walmart provided to their frontline workers represented only a small fraction of the companies’ extraordinary earnings, and an even smaller percentage of the stunning, pandemic-fuelled wealth created for their richest shareholders.
FROLITICKS 
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