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State of Independence

As industry giants tighten their grip, independents long for another wholesaler. They shouldn't hold their breath.

Every time I talk with independent grocers, they bemoan the lack of independent wholesalers in Canada. This is true of both retired independents and current independents, including franchisees. The retired independents remember the good old days when they worked closely with wholesalers for each other’s benefit. The current independents wish they had a choice of where to buy their goods other than through the big distributors that dominate the market today, mainly Loblaw and Sobeys.

The older independents remember companies such as Bolands, Horne & Pitfield, The Codville Company, Knechtel Wholesale Grocers, Oshawa Foods, A. de la Chevrotiere, Hudon et Deaudelin, and Provigo in its earliest days. They were all respected wholesalers that flourished by working with their independent dealers so that both parties could profit. The trouble is, none of those companies exist today.

Where did they go? They were purchased by large wholesalers such as Sobeys and Loblaw. (Provigo is still around, but in name only and under the Loblaw umbrella). We recognize that Loblaw and Sobeys have to answer to their shareholders and that competition continues to grow as fewer and fewer wholesalers fight for the consumer’s dollar. But as they work to appease shareholders, these two companies are exerting more control over their independent franchisees, and they are forcing totally independent grocers to buy what they can where they can, which often means buying from Loblaw and Sobeys.

Back in the 1960s, ’70s and early ’80s, the heyday of franchised independents, the businesses were known as voluntary groups because of the “friendly handshake” arrangement they had with their wholesalers. This system can rarely be found these days, with three possible exceptions: Associated Grocers and the Grocery People in Western Canada, and Co-op Atlantic in the Maritimes. Some people would count Metro as a voluntary group, but its retailers have had to relinquish more and more control to the company. Another group, IGA Quebec, a division of Sobeys, has been successful for its retailers, but there are signs that they too are losing their “friendly handshake” arrangements.

A new wholesaler to independents is a good idea in theory, but such a company would face obvious problems.The first is a dearth of clients. Simply, there are fewer independent grocers around today and fewer new independent stores for a wholesaler to build its business upon. Unlike the 1960s and 1970s, there aren’t too many grocery entrepreneurs around with the interest or the money to open a supermarket.

Meanwhile, many independents are franchised and therefore locked into a contract with their wholesalers. These franchisees can only buy about 10 per cent of their stock outside of their contracted wholesaler, which also reduces the opportunity for a new independent wholesaler to gain business.

It seems, then, that a new independent wholesaler’s existence may rest upon the following conundrum: What comes first, the wholesaler or the independent retailers? Without retailers, the wholesaler doesn’t have a chance. But without a wholesaler there isn’t a choice of where independents can buy. Ugh. Truly a catch-22.

It’s tempting to wish for a new independent wholesaler, but it just doesn’t seem possible right now. The only remaining hope is for a differentt but existing wholesaler to expand operations to cover those areas of Canada where there is a need. And that doesn’t seem likely any time soon.

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