Food producers say Loblaws, Sobeys, Metro and Walmart charge fees and penalties so high, some suppliers are going bust. Grocers say fees and chargebacks are standard and the cost of doing business.
Andrew Kinnear was shopping for groceries at his local Zehrs supermarket last year when he saw something that made his stomach drop.
For Kinnear, it was the beginning of the end. “Being delisted from Loblaw without warning started the collapse of my business.” Canada’s leading food retailers counter that supplier fees and fines are a fair, long-standing industry practice that helps to ensure that shipments from suppliers are complete and arrive on time.
Metro declined to comment and Sobeys did not respond to the Star’s questions about industry practices. When a brand wants to launch a new product — a new flavour of ice cream or potato chips, for example — large retailers charge a one-time fee per chain to accept the product and place it on shelves. If you’re a supplier and want to a get a new flavour of the same product into all the major grocery stores, it could cost hundreds of thousands of dollars, and in Canada such fees are generally much higher than they are in the U.S.
He adds that listing fees don’t protect suppliers from getting their products delisted without explanation or prior notice, so they can end up being a massive sunk cost. When signing on to work with a supermarket chain as a supplier in 2020, Emily said she paid around $100,000 in listing fees to get her products onto the retailer’s shelves.
Supermarkets say fines are issued if there are delays or short shipments from suppliers, adding that there can be dozens of reasons for chargeback fees, including damaged products, mislabelling, delivery to the wrong location and incorrect packaging. But when she received her cheque, Olivia was shocked to see that the grocer only paid $2,000 — with unexplained fees deducting about $10,000 from the invoice total.When payments are delayed and a supplier has products in several different stores or divisions, it makes it even more difficult to keep track of the fees, and it’s the smaller suppliers who suffer the most.
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