Speaker 3:
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Jordan:
Listen, I don’t know if you’ve heard, but Canadians are pretty mad at the country’s largest grocer.
Clip 1:
I’m boycotting because I’m dissatisfied with how grocery is in Canada, how expensive it is. So I just want to feel like I’m doing something and also supporting local businesses like farmer’s markets.
Clip 2:
I’ve just decided enough is enough and I’m no longer interested in shopping at Superstore. Any other Loblaws organizations, including shoppers,
Clip 3:
Frustrated shoppers fed up with rising food prices kicked off what they say will be a month long boycott of a grocery store giant. On the same day the chain reported to an increase in profits.
Jordan:
Here we are on May 15th. We are halfway through a month that is supposedly seeing thousands upon thousands of Canadians boycott all stores and all products owned by Loblaw Companies Limited, which I also dunno if you’ve heard, but is a lot of stores and a lot of products. Will the boycott work? Probably not so far. The corporate giant hasn’t done anything about it, but the reasons behind both the boycott and its effectiveness are worth examining. We live in an age of boycotts. Hardly a week goes by without a new call to withhold our business from a different store or refuse to buy a different product or use a different service. Those boycotts rarely work, but some of them do. What makes a successful boycott in the digital age? What could the thousands of Canadians who really are fed up with Loblaw and other grocery giants do to get some traction? And why do these things feel so satisfying even if they don’t end up making a difference? I’m Jordan Heath-Rawlings. This is The Big Story. Francois Neville is an associate professor of strategic management at McMaster University’s Group School of Business. Hello, Francois.
Francois Neville:
Hi, how are you?
Jordan:
I’m doing very well. Thank you for finding a few minutes to talk about a Loblaw’s boycott that I’m assuming isn’t really working yet.
Francois Neville:
Yeah, we don’t really know if it’s working at this point or if it will work.
Jordan:
We wanted to talk to you because we wanted to get a sense of boycotts in general and where they come from, especially in the digital and social media age. And maybe let’s just begin with this one as an example. Where did the boycott of Loblaws come from? How did it emerge?
Francois Neville:
So to my knowledge, it emerged within the Reddit community on a subreddit thread called LoblawsIsOutofControl, almost like a grassroots, loosely organized and kind of coalesced very, I think in some ways similar to if we recall, while this was not a boycott, the WallStreetBets Reddit, which was responsible for driving investment into GameStop and a AMC Theatres, which sort of created a massive panic in the financial markets
Jordan:
In general these days. Is this how boycotts emerge through places like Reddit? You study this stuff. What can you say about where they generally come from?
Francois Neville:
It seems to increasingly be the case that they emerge on social media forums though like Reddit or through other social media outlets. Historically, boycotts often have been initiated by community groups or advocacy groups. So we think about large entities out there, like the Greenpeaces of the world, PETA, entities actually have resources to get a campaign going. But with the emergence of social media as an avenue for like-minded people to connect, it seems like many of them now are starting to pop up through these platforms like Reddit and like other social media platforms.
Jordan:
How did you have to get the word out before social media and these sort of public forums? If you were somebody like Greenpeace and you wanted to organize a boycott of presumably a company that was doing things that were no good for the environment?
Francois Neville:
A lot of that would’ve occurred through word to mouth, through advertising campaigns, through extreme sort of public demonstrations. So some of us, or many of us are vaguely familiar with seeing images of Greenpeace activists in boats besides large commercial shipping vessels with spray painted signs and whatnot. So I think a lot of it was through we might consider to be kind of shock and awe campaigns that would generate enough media coverage to sort of spread the word to the general public in hopes of growing a certain critical mass of support for the boycott itself.
Jordan:
In terms of the Loblaw’s boycott, what do the organizers actually want people to do and how broad is this?
Francois Neville:
I think it’s an interesting question because it speaks more generally to maybe the times that we live in where it seems like we’re increasingly seeing groups of citizens who are generally unhappy with something and they want it to change, but then the demands themselves are not necessarily actionable. So in the case of Loblaws, what I’ve seen in the coverage is that the general goal of the boycott is to reduce grocery prices and increase food security for Canadians. Now that sounds good, but it’s a pretty broad statement. I don’t really know what they mean by food security necessarily. And some of them were specific demands that are being made across the board. Price reduction is 15% reducing loyalty benefits or member only pricing for PC optimum current holders and putting price caps on essential items. Now, some of those demands, I suppose might be perceived as reasonable, but the most recent financial statements or earning statements of law that suggests that their profit margin is only about 3%, which is not uncommon in the grocery industry, given the economic forces that shape competition in that industry, profit margins are not as high as we might think.
And so it starts to become, I think, a bit challenging to think about how a price reduction of 15% can actually be implemented in a way that is mutually beneficial here.
Jordan:
But in terms of the actions that the organizers want people to take, it’s one thing to, I guess, boycott Loblaw’s grocery stores, but this is a point we’ve made in a separate episode of this podcast. Loblaws is everywhere and they’re asking people to not shop at any Loblaw’s affiliated store. And how much of a challenge is that in this market?
Francois Neville:
That’s a fantastic point, and I think that when it comes to this boycott, there’s a couple of different layers that I think are going to make it challenging for it to continue or to gain momentum. Generally, boycotts require some modification of the consumer behaviour. And with groceries in particular, we’re thinking about a very habitual behaviour, one that is largely driven by convenience. Think about the average person. Does that person want to drive further to get to a different grocery store? Do they want to have to learn a new store layout? Some people might be very partial to the President’s Choice Blue Menu private label, and they’re not necessarily willing to give those up. And then the second part of it, sort of more directly to your point is that the parent company of Loblaw’s, is there’s a huge portfolio of brands there. They’re essentially everywhere.
So we’re now asking, or the organizers of boycott are asking potential participants to do fairly extensive research and to keep all of these top of mind to avoid them. And when we look at the different companies that are sort of under this umbrella, we also find some low-cost players, No Frills, I believe. So if the argument is that Loblaws is charging exorbitant prices, but you’re also asking boycott participants not to shop at No Frills, which would be I think the logical alternative for a lot of people who are trying to be mindful of their finances, it starts to get a little bit sort of muddy if you will.
Jordan:
Give me an example of boycotts that would be the opposite in terms of scope and the way you’re asking people to totally change their behaviour and maybe ones that have worked.
Francois Neville:
Yeah, so one recent example that comes to mind is the boycott of Anheuser-Busch and Bud Light, which was organized in response to Dylan Mulvaney being featured in their promotional campaign.
Jordan:
Right
Francois Neville:
Now what made that one a little bit easier? Well, if we think about the purchasing patterns around Bud Light or Budweiser, there are numerous competitors that are fairly similar in terms of quality and price that are readily available on the shelves right next to Bud Light and Budweiser. The potential participants or participants in this type of boycott aren’t really giving up a whole lot. It’s not very inconvenient for them to participate. It’s easy to maintain that sort of behaviour for a long period of time because you’re not necessarily incurring a whole lot of financial cost or psychological cost or cost in terms of your time to actually buy the competitor’s product in that situation.
Jordan:
In terms of this boycott, and you also mentioned the Bud Light Boycott, which is obviously very politically tinged. How much of this is about the stuff you just kind of explained wanting this company to change their behaviour in a way that can perhaps make things better for consumers without necessarily harming their bottom line or whatever? And how much of it is just about emotion and anger?
Francois Neville:
I think a lot of this is driven by emotion and anger, and I think a lot of why Loblaws sign itself at the center of this is because Galen Weston is a very prominent executive in this industry, and he had a very disastrous performance, at least from a managing public relations standpoint in front of the House of Commons. And frankly, I think he gave a lot of answers that were out of touch.
Jordan:
Right.
Francois Neville:
And I think a lot of people were upset with that and probably rightfully so. I think a lot of this is driven by emotion and frustration, and yes, all of us are, I think hurting to some extent as a result of the pandemic and the financial pressures that have been placed on households and groceries are an essential item that we all need to buy. So I think this is a general frustration with just the state of the economy and the grocery industry is kind of front and center of that because of the prominent sort of role that it occupies in all of our lives.
Jordan:
When I talk about this, I’m not even talking necessarily about whether I agree with the emotion behind these boycotts or not because a lot of the time I do. It’s that I can’t honestly keep up on where I’m buying everything. Whether the coffee company that I am going to for my coffee supports Israel, whether my mutual fund invests in oil and gas, whether I am shopping at Loblaws or going a kilometre or two out of my way. I mean, I could name more of those, but do you know what I mean? It’s a lot to keep track as you move through the world and to keep that all straight when you’re just trying to make your everyday consumer purchases.
Francois Neville:
Yeah, I think related to that point is the notion that I think we have to be also critical thinkers in the sense that is something like this necessarily going to benefit the people that they believe are going to benefit from it. So let’s play this out in a very simplistic scenario, but let’s think about some of the main suppliers of Loblaws. So if Loblaws drops their prices now, maybe they have to look for different suppliers to maintain their margins. So does that have a positive or negative impact on the Canadian farmers who supply Loblaws if they’re being cut out of the equation? I’ve seen certain calls from unions urging people not to boycott Loblaws because they’re trying to negotiate a wage increase for employees, and we all know that people probably need to be making a little bit more money given where inflation is, if Loblaws drops their prices, what does that do to just supply of food in general?
And are people who are in a lower socioeconomic position able to acquire what they need now that things have been artificially deflated or what have you? So I think that’s an important nuance or an important perspective to apply to this as well. And the thing that’s interesting about Loblaws is that I don’t think that I have ever considered them to be a cost leader in the industry. I don’t think they’ve ever claimed that they were trying to be the most affordable grocer out there. There certainly are other players that are cost leaders. If the boycott was called like No Frills is out of control, their prices are kind of no different than Loblaws, then I think you have a bit more of a point to make there.
Jordan:
This boycott is ongoing through this month. It’s gotten this podcast aside, a ton of media attention. Loblaws isn’t showing that they plan to do anything about it. So if media attention’s not working, if this boycott is not going to work, how can people make their anger, but also just their desires and what they think would help them known to the company in an effective manner that might actually encourage change?
Francois Neville:
Well, one of the ways that a number of activists organizations have been engaging with companies with relatively good success these days is through shareholder activism. So any shareholder that purchases a requisite amount of shares or that owns a certain percentage of shares on the company is entitled to placing various proposals on a company’s annual proxy, which are then voted on at the annual shareholder meeting. So that is a mechanism that allows a group to have a direct dialogue with company leadership. Now, would there be a way for consumers to organize or to work with an advocacy group that has experience in advancing campaigns by shareholder activism? That could be one way to do it. It’s hard to imagine something that doesn’t require some level of financial outlay having an impact. So the other thing I’m thinking about is a negative publicity campaign, but again, that would require people to invest some level of financial resources and time and other things to actually orchestrate this campaign.
I think what makes the boycott so attractive is that the cost of participation is relatively low unless you’re factoring in people’s time and the pain of changing your buying habits, but they don’t actually have to dedicate a whole lot of financial resources toward it. The strategies that might be more effective are probably going to require a little bit more of a financial commitment from people, which is sort of counterproductive if we’re all struggling a little bit financially. And the point of this campaign is to try and get Loblaws to change in a way that coincides with those struggles. This is a really important conversation. I think there are legitimate questions to be asked around the optics of corporate greed and whether the grocery industry in particular is one industry that we have to take a close look at to make sure that the everyday Canadian or the everyday consumer is able to afford groceries. But at the same time, I think it’s important to take a very measured perspective on this and think about how this type of change can be achieved in a way that the majority of people will truly be better off.
Jordan:
Francois, thank you so much for this.
Francois Neville:
You’re welcome.
Jordan:
Francois Neville from McMaster University’s DeGroote School of Business. That was The Big Story, for more from us, including previous episodes on the grocery behemoth that is Loblaw Companies Limited. You can head to TheBigStorypodcast.ca. You can also send us feedback on this episode or any other by emailing hello@TheBigStorypodcast.ca or by calling us and leaving a voicemail at 416-935-5935. The Big Story is in absolutely every podcast player and on absolutely every smart speaker as long as you ask it to play The Big Story podcast. Thanks for listening. I’m Jordan Heath-Rawlings. We’ll talk tomorrow.
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