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Martha Muzychka: Forget the beef: where’s the dough?

Loblaw Co. Ltd. chairman Galen Weston Jr. speaks before the company’s annual meeting in Toronto in 2013.
Galen G. Weston CEO of Loblaw Companies Ltd.

Some months after admitting it had defrauded customers via price-fixing bread, Loblaws announced it would offer a $25 gift card as compensation.

The offer wouldn’t preclude a class action suit, but if you asked for and received a gift card, the $25 would be deducted from any settlement you would receive.

Loblaws made the card a pre-emptive PR strike since it faced considerable criticism for admitting to the price-fixing after collaborating with investigators.

Related story:

Loblaw, George Weston under fire for bread price-fixing scheme response

Despite the massive logjam at the beginning of January when the site for gift card registration opened up, cards started arriving at applicants’ homes early in March.

Well, the cards arrived only if you were among the lucky ones not selected for random fraud screening. Despite asking people for their home addresses and birthdays, Loblaws saw fit to ask selected registrants to provide additional identity records such as their driver’s licence or their utility bills as a way to prevent fraud.

News stories say Loblaws expected between three and six million registrants for the cards.  Though the numbers of actual registrants have not yet been released, and registration is continuing until May 1, I did wonder for a moment if Loblaws lowballed its estimates and now has, somewhat ironically, buyer’s remorse over its offer.

Regardless, Loblaws says it won’t cap registration. It also hasn’t backed down from its request for secondary ID, assuring those from whom it will receive such documentation that it will be stored and later destroyed properly.

The thing is, with so many privacy breaches making the news, consumers aren’t quite so ready to hand over their private information. The request from Loblaws for such information as a way to prevent fraud is more than a bit rich considering it defrauded its customers over a significant period of time on a fairly standard food item.

Far from the rising wave of delighted customers talking about their $25 cards, Loblaws now faces a huge swell of angry Canadians revising their tolerant stance and embarking on a company boycott.

It’s true many people said they were registering for the gift card so they could donate it to the food bank in their community. Some food banks, while appreciating the gesture, pointed out they would do better with cash instead of the card itself.

Regardless of what happens to the card, Loblaws now faces a second blow against its reputation. Any goodwill it had started to generate is dissipating because the public believes the company is engaging in empty gestures.

The idea behind the card was to show Loblaws had seen the error of its ways in engaging in criminal behaviour. While not criminal, asking for additional identification suggests a lack of good faith in practice towards its customers, whom we assume Loblaws wanted to keep by making the offer in the first place.

This error in judgment is no small thing. The grocery dollar is not one to dismiss. With places like Walmart offering large, well-stocked grocery departments, Loblaws, as well as Sobeys, is facing stiffer competition for our food bucks.

I’m hearing people talk about taking a closer look at their food budget so they can make the money and the food stretch further. More people are looking to grow their own food, not just for health reasons. Or they are patronizing smaller, locally owned markets and growers in principle. 

Living on an island has its charms, but food security isn’t one of them. I still haven’t forgotten the winter of the $8 cauliflower.

If people were skeptical of the offer before this happened, they are even more skeptical now. Many are openly saying they will now spend their food budget anywhere but Loblaws. 

That’s bad news for the company and a warning shot across the bow for other agri-food giants. Customer loyalty only goes so far. And with the internet archiving such coverage for the future, customers aren’t likely to forget quickly the phony-baloney sandwich Loblaws tried to put on their plate.

Martha Muzychka is a writer and grocery flyer scanner living in St. John’s.

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