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We welcome you to “Bare With Us,” the podcast where we Bare Out the latest economic and financial questions that matter to you. Mike Robinson, a Chartered Investment Manager (CIM) from Calgary, Scott Richardson, a Certified Financial Planner (CFP) from Edmonton, and Finn McKay, a Chartered Financial Analyst (CFA) from Winnipeg, engage in an unstructured discussion, bringing you a wealth of knowledge and a diverse experience from the world of finance.
Each episode features an unstructured, unscripted and entertaining discussion where we pursue ideas and concepts as they arise naturally through our conversation. We tackle a broad range of timely topics, from economic or market trends and financial planning strategies.
Whether you’re one of our valued clients, or someone new to our insights, our goal is to provide you with valuable information, from diverse perspectives, that can help you navigate the complex world of finance.
We are experts in our field, but we are new to podcasting, so we invite you to Bare With Us, while we learn, grow and share! Please feel free to reach out to us with any feedback, to suggest any topics, or to learn how to work with us. You don’t have to, but you can!
Welcome, everybody. Thank you for joining us. My name is Scott Richardson. I'm a certified financial planner.
Mike Robinson:My name is Mike Robinson. I'm a chartered investment manager.
Scott Richardson:And today, we are going to tackle grocery stores. Are they gouging us? What is going on with inflation and the price of groceries?
Mike Robinson:Oh, wait. Wait. Wait. Oh, yeah.
Scott Richardson:Wait. Wait. And I'm Finn McKay, portfolio manager. Is that all, like, just, hey. I'm Finn.
Scott Richardson:Just
Mike Robinson:just just sit there unless directly ask
Scott Richardson:a question.
Mike Robinson:Yeah. Yeah. Unless directly ask
Scott Richardson:a question. Yeah.
Scott Richardson:Well, I'm what I wanna talk about is because I get a lot of clients that one of the things I ask all the time is, you know, how's cash flow? What's going on? And the response that I get back from people all the time is, oh my god. Groceries are so expensive. And, oh, the grocery stores are just ripping us off and everything.
Scott Richardson:And and I I sit there, and I'm like, okay. Well, is that is that really true?
Mike Robinson:Right.
Scott Richardson:And I I thought it was something that we could really talk about, and and I'm very to hear what you have to say, Fin, because, you know, you analyze companies for a a job and for a living. And and so you've got the ability to take a look behind the scenes and say, well, maybe they are, maybe they aren't. And and
Mike Robinson:I agree. It's a great topic because I, myself, I'm that client where, like, I don't fuss myself with things like that because food is a hierarchy of needs. Same with gas. I don't get fussed about gas prices. A, I live in Alberta, so we live on the prosperity
Scott Richardson:of gas. But
Mike Robinson:well, but
Scott Richardson:Yeah. Yeah.
Mike Robinson:But to be Yep. Yep. Frank, I'd rather pay more in gas Mhmm. And have a prosperous
Scott Richardson:province. Yeah. Like like, when you get gas
Mike Robinson:less in gas and and live in a Yeah.
Scott Richardson:Like, when when you when when gas prices are high, clients are doing well. Exactly. Everyone's happy.
Scott Richardson:Yep. Yep.
Mike Robinson:So I don't get fussed about Whereas when when grocery prices
Scott Richardson:are high in Alberta, people are just like
Mike Robinson:Well, I noticed too. Like, I'm a food guy as we we are Yeah. As we all know. And I go to the grocery store, and I'm like, holy moly. Mhmm.
Mike Robinson:But I know there's more to it than, wow, they're ripping us off. Like, I know that's not necessarily the case.
Scott Richardson:There's a few ways to tackle this. Into the pandemic, obviously, there was a lot of cost increases that did happen across the entire supply chain. Right? And the thing that a lot of people like, you see the grocery price increase at the store. Right?
Scott Richardson:Sorry about the
Mike Robinson:long Yeah. So, yes, that occurred.
Scott Richardson:Yeah.
Mike Robinson:Are are we Is
Scott Richardson:it still
Mike Robinson:clear on why And where. That happened? Like, why did costs go up so dramatically because of the pandemic? Was it because of a labor shortage? Like, I'm ask I don't know the answer.
Mike Robinson:I don't know the answer
Scott Richardson:to this. Like, I remember
Mike Robinson:that the price of I buy special flour
Scott Richardson:Yeah.
Mike Robinson:Because I bake bread and I make pizza. Right. And I remember the price of double zero flour, which I buy the buy the, you know, like, 20 kilogram bag Right. Doubled in price. Right.
Mike Robinson:And I couldn't get. I had to wait Yeah. Three months to get it. And the guy's like, the shipping containers
Scott Richardson:Yeah.
Mike Robinson:Crossing the Atlantic from from Italy. Yeah.
Scott Richardson:Well, I mean okay. So here's a few things. Here a few stats on that. So one is, like, shipping from for example, I know that I know the numbers ish on, shipping from China to The US through the pandemic and out of the pandemic during, like, the supply chain crisis used to cost $2,000 to ship a a shipping container from China to
Mike Robinson:to The US.
Scott Richardson:Yeah. Just for one, shipping container. And good. Yeah. Yeah.
Scott Richardson:It used to cost about $2,000. And then and then through the pandemic, it went up to I think it was, like, 12 to $16,000, which, of course, you know, for an iPhone, that's a really low percentage of the cost, that kind of thing. Right? But if you're looking at bulk food 20 kilogram bag of flour. Yeah.
Scott Richardson:It's it's a lot. Like, if you if you disaggregate, what am I paying for? When you buy that 20 kilo bag of, of flour, and let's say it's $20 or whatever it is, is it more?
Mike Robinson:It's like a hundred now. Well, it used to be about 40. Now it's about, and then in the pen in 2021, it was about 90. And now it's about 75.
Scott Richardson:Yeah. Well yeah. So so you well, you had a few things. Yeah. Like, shipping is a huge cost of of food.
Scott Richardson:You know, fertilizer to grow it. And, you know, you can think about the impact that, you know, the Ukraine breadbasket of of, of Europe, that had a huge impact on agriculture prices around the world. The price of energy also, different areas of the world too. So think about natural gas prices in Europe, for example. And, yeah, like, I mean, labor costs have gone up as well.
Scott Richardson:And then the other thing too is in Canada, like, our our currency is depreciate a lot. You don't buy your Italian, flour, you know, in in in Canadian dollars. You buy it in in euros.
Mike Robinson:Yeah.
Scott Richardson:So so there's all of these different things. And if you look at, you know, who where is the actual cost? Where is the actual price taking happening? It's happening I mean, it's happening all along the supply chain. And, you know, for example, Pepsi, they took I I believe I've actually got the number here.
Scott Richardson:It's about a 30% increase across their entire business on prices over two years. That's a business that usually takes only about a one or 2% increase on price every year.
Mike Robinson:And so why but why is that? Is it because of the fuel cost of shipping? Is it because of the labor cost to produce a a bottle of pop or a bag of potato chips or, like, what? Like, why so if if Pepsi is increasing the price 30%, we can go, yeah. Okay.
Mike Robinson:The grocery store is
Scott Richardson:not the one that's gouging us,
Mike Robinson:but it's Pepsi gouging gouging us. Well
Scott Richardson:and so what they do is they increase prices according to their cost so their margins don't change. So they saw their cost go up 30%, and then their margins didn't really go
Mike Robinson:up or
Scott Richardson:go down. Profit margin. Exactly. Yeah. What that does for Pepsi is that and, you know, instead of them making I don't I don't know the exact numbers off the top of my head.
Scott Richardson:But instead of them making $10,000,000,000 in net income, the next year, they'd make 13,000,000,000. So Right. Because their top line has gone up 30%. Their bottom line would also go up about 30% because they just basically passed it all through to the consumer. Now that that benefits the grocery store too because, you know, they're a fixed cost business.
Scott Richardson:Their margins haven't gone up either. And, but Nor have they gone down? No. No. They have not gone down.
Scott Richardson:They're part
Mike Robinson:of the same bureaucracy of Yeah. Weston Foods, for example. I'm not looking on them, but Weston or Empire Foods or whoever. Yeah. If they have a, I don't know what the number would be, 20% net profit margin.
Scott Richardson:It's 2%. Two %.
Mike Robinson:Two % net profit margin. But they're maintaining that.
Scott Richardson:Yep. Yeah. They just pass it right through to the consumer. So it is literally every single step of the supply chain increasing. You can if you go deep enough, you can see certain commodity producers making more money in certain moments, like, in terms of their margins actually going up.
Scott Richardson:But it has been labor's up. Freight is up. Freight Freight is not up as high as it used to be. It's not it's not like $12,000 come down a lot.
Mike Robinson:It has. Yeah.
Scott Richardson:And, and but labor's still very high. You know, there's a lot of aggregate prices that are still very high, and that's, you know, a flow through from from labor as well and energy costs.
Scott Richardson:I think labor is a big piece that and we've talked about this that, and I think people kinda forget. Like, labor, especially during the pandemic, they were declared essential workers. Right. And and there was a premium that was added to to their salary or or hourly wage or
Mike Robinson:Danger pay.
Scott Richardson:Yeah. And and so I'm and and I don't know the answer, but is some of that still lingering in there that, you know, there's an extra cost associated
Mike Robinson:with this? And I don't know the answer to that, but maybe. And maybe it should still be there, not danger pay. But some of the retail outlets are notorious for being pretty skimpy on labor wages, like hiring all all part time people so that they don't have to pay benefits.
Scott Richardson:Mhmm.
Mike Robinson:Well, who takes those jobs? Like, I we don't take those jobs. My my kids don't take those those jobs. People who take those jobs are are newer to Canada, and they're they're just trying to get Mhmm. To on their feet and pull themselves up by their bootstraps, but they're being told about only pay it part time because that way they don't have to pay benefits.
Mike Robinson:Mhmm. Or they don't have to pay a salary. They're only paying minimum wage. Mhmm. So that that pay might be baked in there still, but maybe it should be.
Mike Robinson:Well, the danger pay,
Scott Richardson:I know. I think I think very, I think, it was it was people were pretty upset because, you know, I think the danger pay lasted, like, I think, eight months to a year or something like that, and then they ripped it off.
Mike Robinson:They did pull it. I know.
Scott Richardson:I'm sure they pulled it off. Yeah. But but, yeah, I mean, generally, labor costs have increased across the whole the whole thing. And the cost of labor is, you know, you see the the cashiers, the people stocking the the stores in the in the store. But, I mean, you know, it's the people driving the trucks.
Scott Richardson:Like, the cost of that has gone up a lot. That's a huge portion of the cost of getting like, I mean, really, what is a grocery store? You can buy anything in the world in a grocery store, really. I it's like you know, because of, like, 50,000 products are in an average grocery store, I believe, and from all over the world. So, really, it's a big supply chain.
Scott Richardson:And so, the shipping costs are a huge part of that. So that's been a huge part of the increase, and those are jobs that do pay a lot more. There's also, like, distribution and warehousing and all that kind of stuff too.
Mike Robinson:So Security. Warehouse security. Warehouse security. Well, and
Scott Richardson:Or just security in the grocery store with people walking out with walking out with products.
Scott Richardson:And, you know, that's that's the other thing too. Right? Like, they don't you know, they wanna every single grocery store is trying to beef up security quite a bit because of that, but they do just pass that along to the consumer. Yeah. Like, if if a if a grocery store is losing a lot of money on on cost because Vacage.
Scott Richardson:People are are stealing, then you just now everything costs more.
Scott Richardson:Yeah. Have you ever tried to get out of a grocery store if you're not gonna buy something? It's impossible. I just need
Mike Robinson:to use the washroom. Yeah. Yeah. But someone was selling us last night that where they shop and they, you know, they're they're well-to-do individuals. When they buy meat, someone escorts them from the meat counter.
Mike Robinson:Seriously? Yes.
Scott Richardson:Because the cashier.
Scott Richardson:Yeah. To the cashier. Yeah.
Scott Richardson:Yeah.
Scott Richardson:Well, I think about They're talking
Mike Robinson:about a highly respectable, nice family person.
Scott Richardson:Well, and can you can you imagine, like, the cost of selling that meat now? Right. You know, you might as well just have it behind you know you know, like, way back in the day, what was the name of that? Was it Piggly Wiggly's? We're, like, one of the first stores that actually, like, let you go in and actually do the shopping.
Scott Richardson:Before that, you did go to a counter and you'd say, I want some meat. This. I want this. And then they would, like, you know, carry a bucket for you. Yeah.
Scott Richardson:Yeah. Exactly. You know, like, now we're going back to that kind of model when it's it's a lot more expensive to run that kind of store.
Mike Robinson:Yeah. Good point. And in the pandemic was, you know, by necessity but has stayed is the advent of the list. You do it online.
Scott Richardson:Yeah.
Mike Robinson:You can order online. Here's my list. Mhmm. I'll I'll pull into this parking stall number 3. Please load it into my car.
Mike Robinson:We'll pay someone to do that.
Scott Richardson:You know, it's it's interesting because, like, I you know, we we we rarely go into the store anymore. We get it delivered or we go and do the pickup. And it it's amazing that you can get someone to do an entire grocery shop and then bring it to your door, and it costs you $10? That's ridiculous. Like, it takes it takes, like, an hour to go do a good grocery shop.
Scott Richardson:And and every once in a while, something's missing. Sometimes I've actually gotten things that I didn't even have on my list, which is a little bit weird. So it all kind of offsets, you know, like, once we got a bag of walnuts.
Mike Robinson:Cook with, four kilograms of rosemary. I remember
Scott Richardson:I remember once, actually, we we ordered, two, like, you know, three pound or whatever things of strawberries. No. One pound thing. It doesn't matter. We we ordered strawberries.
Scott Richardson:And and then, they substituted out two giant watermelons. And and I actually I saw the email come in saying, we've we've decided to give
Mike Robinson:you watermelons instead of strawberries, and we're not a watermelon household. Right? Like, we don't know what to do. A little bit. Well, is there a such thing as a watermelon?
Mike Robinson:My brother is a watermelon.
Scott Richardson:He he eats those by the barrel. But Okay. But but, anyway so then I actually I made a point of me being at the house. Not not, like, not, like, to, you know, make a thing out of it, but then be, like, you know, why did you guys give me watermelon? And she was like, you know, I don't know.
Scott Richardson:We just they were right there.
Mike Robinson:But, arguably so so I don't do that, like, because I'm a I like to pick my my produce or pick my meat or whatever. I don't fish and all that. But, arguably, I'm paying for your service.
Scott Richardson:Yes and no. So this is a really interesting thing that I think a lot of people are not really considering about how grocery stores are changing. One is the aspect of that when you are buying stuff online and you're using their online portal, you're using you're clicking on things, and there's advertisements now, and it's crazy margins. I imagine. They won't talk they don't talk about it a lot.
Scott Richardson:And, you know, it's one of those things where, I mean, it's really great, so shut up about it kind of thing. But, you know, if you are doing, like, Google search for something, that goes you know, Google gets gets paid. It's a great it's a way higher margin business. This is a 2% margin business normally. So Loblaw's margin, I believe, net net profit margin is a little over 2%.
Scott Richardson:That is with the much higher margin, you know, health stuff at Shoppers. Right? That's the drugs that. Including that. So Perfumes.
Scott Richardson:Perfumes. Cosmetics. Cosmetics, drug sales. And, like, the
Scott Richardson:include the pharmacy in the grocery store?
Scott Richardson:It does include the pharmacy in the grocery store, all that kind of stuff, and that is way higher margin than the 2% margin business. So the food retail is zero. The food yeah. Exactly. What is the food margin?
Scott Richardson:And this is where, like, you know, people say that they're ripping us off and all that kind of stuff. And it's like, you know, could the business be ran a little bit more efficiently and the cost pass through a little better? Probably. But, you know, more than half of the business at Loblaws, most people don't know this, more than half of the profitability is actually in the, like, the drugstore side of this and the cosmetic side of it. So, yeah, like, it's it's virtually a zero margin business.
Scott Richardson:You know, you'd never call Law of Law a nonprofit, obviously. I think a lot of people get really offended by that, to be honest. But it is it is closer to a nonprofit than most businesses.
Mike Robinson:But Or call it loss leader.
Scott Richardson:And that's the best way to put it. Right? Is, you know, they know how to manage the loss leader position so that they can have a really durable revenue stream and cash flow stream for the business. The thing that's really interesting though with this, like, online advertising thing is that it totally changes the margin profile for the business. So instead of, you know, you go into the store and you just grab something, you know, Smucker will pay, blah blah directly to have when you search Jam, there's an advertisement bar, and then you click on it.
Scott Richardson:And when you click on it, it's direct sales. You know, if you if Smucker was paying for to be on, like, the eye level of an aisle, that was you know, they would pay a little bit for that. But when they can actually see that you put it in there and they they can now get some consumer data on on whatever stuff you buy
Mike Robinson:can measure it with
Scott Richardson:the results. Exactly. And this is a way higher margin business. So, you know, a lot of that ecommerce cost of, like, walking through the store and actually grabbing stuff is paid for through that higher margin part of the business, which I think is really interesting. And it also the other thing that's kind of happening too within the grocery store landscape right now is that the private label business is becoming really, really important.
Scott Richardson:That's much, much higher margin than selling, like, you know, a craft peanut butter would just be to sell, like, a PC brand or a no name brand or a great value brand version of it.
Mike Robinson:Yeah.
Scott Richardson:They don't have to do the advertisements. And the other thing too that I think, especially Loblaws has picked up on is, you know, private label doesn't have to be a, like, you know, quote, unquote, lesser version of a certain product. Like, you don't have to just do peanut butter. And, like, the Trader Joe's of the world have really shown that you can make a whole store out of really cool products. And then not only have you got higher margins on it because you're not doing the advertising cost, but you also have the ability to create, like, a lock in effect.
Scott Richardson:Like, if you go on the Loblaws is out of control subreddit or whatever, like, a lot of the posts are people saying, you know, there's a where is a comparable version of this PC brand product that I used to buy? And it's because they like that product, and they wanna buy it elsewhere, but it doesn't really exist elsewhere. So those are higher margins. So those things are also kinda changing, the dynamic. But I think I think that, really, like, when we're looking at the cost of groceries going up, like, yeah, like, I remember buying butter for four bucks, and now I think it's hard to find butter for under 6.
Scott Richardson:Right? And that's, like, a very visible in your face.
Mike Robinson:Mine is brand. Yeah. So I don't buy, like, Wonder Bread. No no offense to Wonder Bread, but, like, I don't buy, like, plain standard no name brand bread. Yeah.
Mike Robinson:Like, I like sort of special grain spreaded bread. Italian flour. Yeah. Yeah. And and at one point, it hit it hit $5 for a loaf of bread in the in the pandemic.
Mike Robinson:I'm like, $5 for a loaf of bread. Well, now it's 7.
Scott Richardson:Yeah.
Mike Robinson:Like, that is from 5 to 7 is a very significant increase.
Scott Richardson:Yeah.
Scott Richardson:Yeah.
Mike Robinson:Right?
Scott Richardson:Yeah. No. It is it is. And and, you know, it it kind of, I think, goes to show the importance of owning assets that are productive assets. It can grow and increase your cash flow stream.
Mike Robinson:Pass costs onto consumers.
Scott Richardson:Yeah. Yeah.
Scott Richardson:So, Mike, you make a good point though because I think like, I talk to clients all the time about what you're purchasing. And and I think one of the things that we're seeing, like, you kinda covered the inflation piece that yeah. Okay. We know groceries are getting more expensive, but are your actions also making your groceries more expensive? And I think that's something, that I think a lot of people miss.
Scott Richardson:And I talked like, I've told you the my my blueberry story of being at the grocery store. I will. Yeah. But, you know, I went to the grocery store, it's months and months ago. But when I walked in, like, on my list was blueberries, and blueberries for, like, a double pack thing or whatever it is.
Scott Richardson:I don't know. Two pounds, whatever it is. I don't even know. But, anyway, this is like a container of
Mike Robinson:that. Clamshell.
Scott Richardson:Clamshell thing.
Mike Robinson:Double clamshell.
Scott Richardson:Yeah. It they were $12.
Scott Richardson:Holy crap. That is wild.
Scott Richardson:And I was like, that's a lot of money for blueberries. Like, I'm
Scott Richardson:How much do you want the blueberries? And so
Scott Richardson:I was like, well, we're not getting blueberries.
Scott Richardson:Yeah. Right.
Scott Richardson:Right. But then I stood there for a second. I was like, who is buying this?
Scott Richardson:Who is? Yes. Who is?
Scott Richardson:Right. And so I parked my cart, probably really annoyingly for people. And and I and I just stood and and I watched for a bit. And people were walking up and just grabbing blueberries and putting them in the cart. I don't think they looked at the price.
Scott Richardson:I think they were on the list. And then they they just grab it, and then they're shocked that their groceries are going up. But but that's an action thing of of being able to look at the price and say, oh, okay. Well, no. I'm not getting that.
Scott Richardson:And, like, your point of, like, buying online, I know a lot of clients that do that because it stops them
Scott Richardson:Right.
Scott Richardson:From from buying things that like, just grabbing this and this and throwing it in their cart. Yeah. They can control what they spend, and then they also take more time to look at the prices because they're doing it online.
Scott Richardson:Well and and you you know, this is a really interesting point because the nice thing about online is that, you know, I can search black pepper and the grocery store. Like, my I go to a superstore near me, and they've got black pepper in, like, every corner of the grocery store. There's, like, six different versions of black peppercorns you can buy, and they're all different prices for per gram. Right? But, you know, the one in the international aisle is the cheapest.
Scott Richardson:But if you were just walking through the store, you might not know that, and you just grab the one. But that's the great thing about when you search online is you can actually search black pepper, and then it'll show you look past all the ads. But, you know, it'll actually show you the one that is the cheapest, which is another benefit of,
Mike Robinson:the other one. Thing is interesting. And I don't know a lot about this. You you do. But the I think online ads and the data mining that comes from online ads is a whole game changer because even, like, say, I grew up in the eighties and nineties, you know, we have a we have a situation where people are overconsuming.
Scott Richardson:And
Mike Robinson:so instead of food, but still sold at the grocery store like, for example, you know, the advertising industry has pushed us into buying, like, cleaning products that are off the rails expensive.
Scott Richardson:Mhmm.
Mike Robinson:But they are, you know, smell like this or smell like that and antibacterial or blah blah blah. Like, diluted vinegar will do the job.
Scott Richardson:Yeah. Yeah. Right. Right. For this one.
Scott Richardson:But this one smells like curry dust, and it it'll make your house feel bigger and Exactly.
Mike Robinson:And I'm not claiming innocence. Like, we buy that crap too.
Scott Richardson:Yeah. Yeah. Yeah.
Mike Robinson:Like, my love my wife loves us all that shit. Right? And I'm not saying I'm mister righteous, but I go, like, why are we paying $18 for this jar of whatever it is
Scott Richardson:Mhmm.
Mike Robinson:When we can like, a simple soap solution or, like, diluted vinegar will clean your toilet too. And in fact, it's probably better and not toxic. Yeah. But we're buying it. Yeah.
Mike Robinson:We're all doing it. I'm right there. I'm right in there Mhmm. With it.
Scott Richardson:Well and that that is, you know, the the the lifestyle creep stuff. You know? Like, you you know, naturally, as you get older I mean, you know, the inflation over the last few years, like, no there's no way around it. Like, everything's gotten more expensive. But in addition to that, as you get older and you make more money, you will just naturally buy more expensive things and not really care as much.
Scott Richardson:Like my bread. Right. Like your bread.
Mike Robinson:Need to buy that bread.
Scott Richardson:Yes. Yeah. Right. You you would you would do fine. Well, maybe not fine, but you would you wouldn't Why?
Scott Richardson:You know?
Mike Robinson:I wouldn't waste away.
Scott Richardson:Waste away without without that bread.
Scott Richardson:But your lifestyle creep like, I call it grocery cart creep.
Scott Richardson:Yes.
Scott Richardson:I talk to clients about it all
Mike Robinson:the time.
Scott Richardson:It's the Costco effect.
Mike Robinson:Oh, the Costco effect.
Scott Richardson:So, you know, you've got a list of 10 things.
Scott Richardson:Yeah.
Scott Richardson:And you go to Costco, but then while you're there, you taste this, you try that, and you're like, oh, I think I'll have that. And you put that in your cart.
Scott Richardson:Yeah.
Scott Richardson:And and then you walk out of there with 15 items even though you went with 10 Mhmm. Or a list of 10. And then
Mike Robinson:you go
Scott Richardson:hold on. The next time you go to Costco, your list is now 15 items Yeah. Because you liked those things, and you wanna buy them again. Yeah. And so it's not that the grocery store is becoming more expensive.
Scott Richardson:It's your habits Yeah. And your choices Yeah. Are more expensive because you bought that thing, and you really liked it. It. Yeah.
Scott Richardson:And you wanna keep doing it.
Scott Richardson:Well and and, you know, like, when I was in university, I would strategically shop. I'd be like, you know, Walmart has the cheapest chicken breast. It's $10 for a pack. Superstore does not have the cheapest chicken breast. It is 20 whatever dollars for a pack.
Scott Richardson:I will go to Walmart, and I'll get that and, like, the other things that I know that they do well for for what I want. And then, you know, next week, I'll do my shop at Superstore, and I'll get different things. I don't do that anymore because it's a pain in the ass. And, and that that does lead to, like, higher higher grocery bills in general because every grocery store I mean, Costco actually typically doesn't do this. They don't have loss leaders.
Scott Richardson:Costco is a very genuine store. They'll just give you the price. And if it's like you you don't actually save money on everything at Costco, but it is higher quality.
Mike Robinson:And The hot dogs and pop have gotta be a loss leader. So they they They've gotta be. You know, and you ask
Scott Richardson:a great question, and, I think you could Jim I think there's a great quote from Jim Senegal who was one of the the people who started Costco, and he actually said to one of the CEOs that if you if you change the price of the hot dog, I'll
Mike Robinson:Yes.
Scott Richardson:Kill you. Yeah. Yeah. Yeah. I remember that.
Scott Richardson:Yeah. Yeah.
Mike Robinson:And I
Scott Richardson:think Yeah.
Mike Robinson:So I I I do recall that, and
Scott Richardson:I
Mike Robinson:read that. But I and I think they're rotisserie chickens.
Scott Richardson:Mhmm. I don't
Mike Robinson:know if it's a loss leader, but I don't think they make much money on it. But it's at the back of the store for a reason.
Scott Richardson:Right. Right. Well and and, you know, it's it's I've I've heard, and I don't know if it's true, but that they don't lose money on anything, which is insane. And what they've said is that they've done so much work to make sure that they drive the cost down, and it's like purchasing economics. It's changing the way that you actually get the ketchup.
Scott Richardson:It's, you know, all that kind of stuff that they're and, you know, buying you know, we're just, like, chicken processing plants to drive the cost down. And they just do everything that they can to get the cost as low as possible.
Mike Robinson:So they can What I've heard as well and, again, I haven't verified this, but I know somebody very well in the retailing industry. They were a senior executive in the home hardware chain.
Scott Richardson:Okay.
Mike Robinson:And he told me that the main and and they like, a a company like Home Hardware is very, very, worried and afraid of companies like, Costco and and home Home Depot or, Lowe's and stuff, right, for obvious reasons. He said that Costco's main way of making money is by putting money on deposit. So if you if you have a product and Superstore will say, Fin, I'll give you, you know, a dollar per unit
Scott Richardson:Mhmm.
Mike Robinson:And I'll take,
Scott Richardson:you
Mike Robinson:know, 25,000 units, and, you know, I I want, thirty days to pay. Mhmm. Costco will say, well, I want, I'll still it's still a dollar unit. Mhmm. But I want I'll take triple the amount.
Mike Robinson:Yeah. But I want ninety days to pay.
Scott Richardson:Yeah. And they've sold it all in the first thirty days.
Mike Robinson:Sell it. Exactly. That's their goal is they sell it all in the first thirty days Yep. And put the money on
Scott Richardson:deposit. Yeah. Yeah. No. That's that's a that's that's a total beauty, retail model on how you make money is you turn the assets faster than you pay.
Mike Robinson:It over faster. Yeah.
Scott Richardson:So you you you would say, yeah, like, you know, hundred thousand dollar order worth of, I don't know, hot dogs or whatever. And then, you know, you won't pay for it until if you bought it in January, you're not gonna pay for it until March, but you've sold it all. I you know? I mean, if you're Costco, probably within the first day that you bought it. And
Mike Robinson:so the decision that when people say, like, what how do you get Costco to carry your product
Scott Richardson:Mhmm.
Mike Robinson:It's it it just has to sell it's high turnover.
Scott Richardson:Yeah. Well, and they're If
Mike Robinson:it sells fast, they'll sell it.
Scott Richardson:And they are so good at merchandising. You know, I knew that when we were gonna talk about grocery stores, we were gonna talk about Costco. I love Costco. But, they they are very particular about the types of products that they sell. One thing that they they talk about pretty frequently is that every single product that they sell has to be unique to Costco.
Scott Richardson:So when you go and you buy, like, a blender that you could buy, a Canadian tire or something like that, it has to have, like, an attachment or a pack format that is different because part of it too is so that you don't make that price comparison. The biggest issue with regular grocery stores like a Superstore or a Walmart or a Sobeys is you go in and you see, like, that two kilo thing of Kraft peanut butter, and you can immediately say this is cheaper at Walmart or at Superstore. Right? You can't do that at Costco because, you know, they're gonna sell you instead of a two kilo thing of peanut butter, they're gonna sell you a two pack of, like, a kilo and a half. And you you can't do that
Mike Robinson:math. Right. Far far too low.
Scott Richardson:People can't even look at the price when they're buying.
Scott Richardson:Yeah. So you'll be
Mike Robinson:asking for that.
Scott Richardson:When I
Mike Robinson:was in high school, our teachers all told us, look at the price per unit. Don't look at the price. Look at price per unit. Right?
Scott Richardson:But Well, and
Mike Robinson:But no one does.
Scott Richardson:No. To your point, Finn, like, you don't go to different stores because you don't have enough time. I think time is one of those things that that really pushes this because well, you don't go to multiple stores, and you don't a lot of people don't go to the the meats, you know, the deli Right.
Scott Richardson:Right. Because there used to be you used to go to a deli for you.
Scott Richardson:Go to an actual butcher. You would go here for your to a bakery for
Mike Robinson:your lunch. Conditioning. Like, I I don't I don't think you're wrong, but I don't buy that we don't have time.
Scott Richardson:I think that You choose
Mike Robinson:Yeah. You choose where you spend your time.
Scott Richardson:Yes.
Mike Robinson:It's like people saying, oh, I don't you know, at home, like, I don't I'm not a TV guy or movie guy, and people go, oh, I don't have time to watch a movie. I'm like, yes. You do. Mhmm. You just choose To watch TikTok.
Mike Robinson:To do something else. Yeah.
Scott Richardson:No. But, seriously, like,
Scott Richardson:I think I
Mike Robinson:think do you have time to go to multiple grocery stores? Yes. You do. Yeah. But you're and I'm not saying it's wrong.
Mike Robinson:I'm not saying it's right or wrong, but you choose to do different things. When I grew up, we were a standard middle class, you know, maybe even arguably lower middle class, but we wanted for nothing. We but my mom was the strategic shopper that you're talking about when you're in university.
Scott Richardson:Mhmm.
Mike Robinson:Like, I'm not buying chicken breast at at Safeway when I can buy it at Loblaws for for for last. Right? But we tend not to do that. Mhmm.
Scott Richardson:I don't
Mike Robinson:know if it's because of our socioeconomic status, or is it a society wide
Scott Richardson:I think it could be
Scott Richardson:a society wide thing. Like, I talked to a client the other day, and she's struggling a little bit right now with income business owner type thing, can't find some contracts. But, you know, she said to me the other day, she said, I used a coupon the other day. I've never used a coupon. Right.
Scott Richardson:It's like, well, why not? Yeah.
Mike Robinson:Well, no one does anymore. Loblaws, we we call them superstores, but whatever. Same thing. They have a wall of coupons. Yeah.
Mike Robinson:You stood and watched people look at blueberries. You should stand and watch how many people look at the coupon wall.
Scott Richardson:Yeah. Zero. Yeah. Zero. Yeah.
Mike Robinson:Yeah. Including me. Yeah.
Scott Richardson:Well, and they can Including me.
Mike Robinson:I walk in, and I wanna get out of there as soon as they can.
Scott Richardson:Yeah.
Mike Robinson:And but if you spent, I don't know what, hundred and twenty seconds
Scott Richardson:Yeah. Looking at the coupon quality save $15. Yeah. You know? Well and and and, and you know about Flash Foods?
Scott Richardson:No. I love Flash Foods. So it's
Scott Richardson:Never really.
Scott Richardson:It's a so it's a thing that they have in in a lot of the Loblaws things where it's like it's an app, and it's like food that's going bad, like, today or tomorrow. And they just they put it in the app. They stick it in the fridge. And, you know, you can just buy it, and it's, like, usually, like, 50 to 80% off kinda thing. But it's like, if I want, like, a meal for that night and I don't know what to make, I'll just see what's on the Flash Foods app.
Scott Richardson:And, you know, you could get, like, pork tenderloin for, like, $3 or something like that. And then it's like, we're having pork tenderloin tonight, and it's totally good food, but they're not gonna sell it because it goes bad, like, tomorrow kind of thing. Yeah. And, yeah, there's a lot of
Mike Robinson:stuff like that. That's a good thing.
Scott Richardson:Yeah. No. And you're efficient. Yeah. And you're saving the food.
Mike Robinson:Yes.
Scott Richardson:They still get to, you know, cover a bit of their cost too, which is good for them.
Mike Robinson:Yeah. That's another point, and I'm I'm most guilty because I'm a I'm a food guy. Like, I don't go to the store and see what's on sale or what's cheapest. I already know what I wanna get because I wanna make this. Right.
Mike Robinson:And maybe once in a while, I should do that. But more often than not, it should be, well, what can I get today Yeah? That I'm gonna be happy with, but I can feed my family and and cost less?
Scott Richardson:Right. We we've had that debate a lot is is do you go with a list Mhmm. Of these items and that's what you get regardless of price, or do you go in with a general idea of, well, I need to make sure I got breakfast, I gotta get some fruit, some veg, some this. And what we're gonna get is gonna be based on whatever is on sale.
Scott Richardson:Right. And then you make the
Scott Richardson:Two different ways of rolling out
Mike Robinson:a third. Like, I'm a list guy. I want to spend as little time as possible Mhmm. Other than I do like to actually look at my produce and fish and meat and all that. But I go, this is what I wanna make for the next two to three days.
Mike Robinson:Mhmm. So these are the items that I want. Mhmm. And I go and buy them. When my wife, retired from teaching, like, she does more of the grocery shopping now.
Scott Richardson:Mhmm.
Mike Robinson:And I'll come home, and I'm like, who who bought this?
Scott Richardson:Mhmm.
Mike Robinson:Yeah. I bought that. You know, whatever. It's pork tenderloin or whatever. Well, what's the plan for that?
Mike Robinson:I don't know.
Mike Robinson:I just look good. Like, well, I'm
Mike Robinson:the one who does the cooking.
Scott Richardson:Right.
Mike Robinson:Right.
Scott Richardson:So Impulse buying. If you got a plan for that pork
Mike Robinson:tenderloin, three pack,
Scott Richardson:like Just three pack of both of them. Like No. I've I've been there.
Mike Robinson:It should be like, no. No. I don't. I just thought they looked pretty good, and I'd buy them, and it was, you know, $12.
Scott Richardson:It's always pork too. It's always pork.
Mike Robinson:Pork.
Scott Richardson:You end up with way too much. I remember my dad dad coming out
Mike Robinson:of my house, and he's dropping interrupt you.
Scott Richardson:Yeah. Yeah.
Mike Robinson:Yeah. Because it's on the inflation thing.
Scott Richardson:Sure. Yeah.
Mike Robinson:Yeah. Like, pork is dramatically cheaper than beef, and the price increase Yeah. Is negligible. Yeah. So you can buy very good high quality pork chops Right.
Mike Robinson:For, like, $12. Right. Whereas this the equivalent in beef would be, like, 14
Scott Richardson:Yeah.
Mike Robinson:Or 80. Yeah. Yeah.
Scott Richardson:Yeah. Yeah.
Mike Robinson:Anyway, sorry. No. No. No. I was
Scott Richardson:just thinking about my dad coming over to my or calling me in a panic because he's like, Finn, I was at Costco when I made an impulse buy. And I've got this giant ham, and I can't eat it. And Doty's out of town. And I'm looking up at it every meal, and I hate it. And he's like, can I bring you some ham?
Scott Richardson:I'm like, yeah.
Mike Robinson:Yeah. Okay. Sure. Sure.
Scott Richardson:Yeah. I think the language piece is a big piece about about it too. Like, I always call it with people, like, need versus want. Like, people will say, oh, I need a coffee. Well, no.
Scott Richardson:You don't need a coffee. You want a coffee. And they'll do that a lot.
Mike Robinson:Starbucks. It has to be $9.
Scott Richardson:And but that language, it's like, oh, I need to go get this from the grocery store. I need this. Mhmm. And it's, well, is it a need or is it a want? Yeah.
Scott Richardson:And those are two different things.
Scott Richardson:Yeah.
Scott Richardson:And they have different price tags attached to it. And I
Scott Richardson:I think there's
Mike Robinson:price tags. So it's a joke, and maybe we'll edit this out. It's not that funny. But, like, in the nineties, there was a TV show with Michael j Fox. That was in the nineties, Noah after that in the nineties.
Mike Robinson:He was, like, the mayor or something. Spin City.
Scott Richardson:Oh, yeah. Yep.
Mike Robinson:So this is in the nineties when coffee shops were becoming a thing. Like, coffee shops never used to be a thing. You went and bought donuts and coffee at Tim Martin's. Right. And you left.
Mike Robinson:Mhmm. Right? Like, Chapters Indigo and Friends, the TV show Mhmm. Popularized coffee shops. Yeah.
Mike Robinson:Right. So in the nineties, it was a new a new thing. And so the joke on this television show was that his girlfriend says, let's just go to the coffee shop. And he's like, what do like, what are we doing here?
Mike Robinson:She's like, relax. Would you go just go get another coffee.
Mike Robinson:He's like, yeah. Sure. You got $8. Well, now it is $8.
Scott Richardson:Like Yeah. Yeah. Literally.
Mike Robinson:And you don't even blink an eye. Yeah. It's a cup of coffee.
Scott Richardson:Well and and and this is something too that I think is really I I try to be really thoughtful about, you know, do it like, spending money on things you act that actually make you happy. You know? Like, don't you know? If if you're like, well, you know, getting a coffee on the way to work is really important to me, and I love it. That's you you do it.
Scott Richardson:Then you're happy. Absolutely do it. You know, having a, a steak on a Friday night is really important. Do it. But, like, if the $12 blueberries are just there and you just grab them because it's on the list, not being very thoughtful
Scott Richardson:Yeah.
Scott Richardson:About it. And, yeah.
Mike Robinson:Well, I like what Warren Buffett said about his house we saw yesterday in the in the meeting. Warren Buffett lives in a nice house, but it's not a mansion. Yeah. And he said, I would move if I thought it would make me happier.
Scott Richardson:I believe that he even actually calls his house a giant mistake. I can't remember the exact terminology that he used for it, but, might have been, like, the biggest waste of money I've ever because he thinks about how much he could've he took that money
Scott Richardson:If
Mike Robinson:he did something else.
Scott Richardson:And put it into, like, Berkshire
Mike Robinson:Yeah.
Scott Richardson:It'd be worth, like, you know, hundreds of millions.
Mike Robinson:I like the way he says it, though. Like, I can afford it. I would move to a bigger, better, nicer house
Scott Richardson:Mhmm.
Mike Robinson:If if I thought it would
Scott Richardson:make me
Mike Robinson:happier. Right. But it won't. Awesome. Yeah.
Mike Robinson:Why would I spend the money? And that could be back to the housing discussion. Yeah. Yeah. Like, is that making you happier?
Mike Robinson:You know, there's because I grew up in a 1,400 square foot semi detached house in GTA, and we were happy. Yep. We wanted for nothing, and I was sad when my family sold it.
Scott Richardson:I'm just getting this, this stupid outlook. Always trying to show me stuff, but I, I think it's the Vanderbilts. They Yes. They have portable engines. Yes.
Scott Richardson:Yes. Okay. It is the Vanderbilts. Yeah. So they they are famously one of the, you know, they were one of the wealthiest families ever created.
Scott Richardson:Right? I believe it's the railroad industry, if I'm not mistaken.
Mike Robinson:Railroad and shipping.
Scott Richardson:And shipping.
Mike Robinson:Yep.
Scott Richardson:And they had, like, I believe inflation adjusted well over 300, maybe $400,000,000,000 in wealth.
Mike Robinson:In And When when, when the original Cornelius Vanderbilt died Yeah. In the late eighteen hundreds Yeah. His estate was a hundred and 5,000,000. Hundred million.
Scott Richardson:Yeah. Right. And if you inflation adjust that today late eighteen hundreds. Late '18 hundreds. Yeah.
Scott Richardson:It's it's actually, like yeah. Now hundreds of billions of dollars Yeah. And just adjust for inflation. Think about what that'd be worth today if you just, you know, put it into Money market. Into a money.
Scott Richardson:Honest. Yeah. And they I I believe within fifty years, they blew it all to nothing. Yeah. Building houses, competing with each other.
Scott Richardson:They they the the the, you know, the money was passed down to the kids, and, they spent it on, like, competitions of who could build the bigger house. And I can't imagine like, you know, I remember in elementary school, they would give you a project, be like, you know, here's if you had a million dollars, you know, go on the Internet and find things you would buy that aren't houses and try to spend a million dollars. And, you know, none of us can do it. It's actually quite difficult.
Mike Robinson:Yeah.
Scott Richardson:Of course, now it's a lot easier. But, I can't imagine spending, you know, hundreds of billions of dollars and wasting away, and they were miserable. They were miserable people. Yeah. And I believe Anderson Cooper is actually a Vanderbilt, and he's, like, one of the first ones that seems like they're actually, like, you know, well adjusted happy person.
Scott Richardson:And it's one of the reasons is that he didn't, you know, receive the actual, you know, horrifying situation of inheriting a tremendous amount of money into a family that was just miserable, and the only thing that they thought they could do to get happy was suspended.
Mike Robinson:So this con the conversation came up yesterday in our meetings about Vanderbilt. That's why I knew those stats off the top of my head.
Scott Richardson:Oh, yeah.
Mike Robinson:I don't always walk around without
Scott Richardson:all of it. I I was telling Lauren about
Mike Robinson:it. Yeah. So Lauren's talking about it. Okay. Good.
Mike Robinson:One of most interesting things I found about that, though, was that he had nine children, and he left his fortune to one of them. And guess what? It was 2,003. Kids. Right.
Scott Richardson:Yeah.
Mike Robinson:But the oldest son Right. Inherited the hundreds of billions. And I think another son got some.
Scott Richardson:Okay.
Mike Robinson:But, like, seven of his children were five
Scott Richardson:of the children. 5% or something. Yeah. Because the other children's fought over, like, 5% of the estate.
Mike Robinson:And they and they were female. Mhmm. Yeah. And they got left nothing. I know this is off topic, but what a radical change from today.
Mike Robinson:Like and a horrible thing. You said they're horrible people. Like, no kidding.
Scott Richardson:Yeah. They were horrible people. Miserable people. Yeah. Yeah.
Scott Richardson:No. So, you know, will the $12 blueberries make you happy? Be thoughtful about where you spend your money. Own, assets that will influence you.
Mike Robinson:Now those houses too just, again, this is just a an aside
Scott Richardson:Mhmm.
Mike Robinson:Topic. But in the late eighteen hundreds, New York City and Manhattan was not what it is now. So, like, some of those mansions are Downtown Manhattan. Right. How efficient
Scott Richardson:Yeah.
Mike Robinson:Is that? How good of a use of space is that? Like, they're probably all not, like, hotels or, I don't know.
Scott Richardson:Yeah. Well and and, you know, actually, this is a this kind of I mean, not to go back onto you know, we were talking about housing before, but one of the biggest problems with, housing costs in a lot of bigger cities is actually rent control. Yeah. Because what it does is it artificially changes the supply dynamics of, of the housing, you know, market. Because you might be, you know, a five, you know, six, you know, person household in a rent controlled apartment in New York, and you've been in there for ten years, kids move out, got this huge place.
Scott Richardson:Maybe someone dies, and it's just you in this massive place. But because it's rent controlled for the last ten years, it's really cheap. You're not gonna move. And then but a family could absolutely use that space To
Mike Robinson:a far better effect. Far
Scott Richardson:better effect.
Mike Robinson:Yeah. Yeah.
Scott Richardson:And and, also, you know, who's gonna throw up a new apartment building, if you know that there's gonna be, you know, controls around how how you price it.
Mike Robinson:Right.
Scott Richardson:And so that also artificially lowers the supply of of the amount of, you know, living space that there is.
Mike Robinson:I could never wrap my head around that either because in Alberta and Calgary, there has been mild talk about rent control because housing is
Scott Richardson:Right.
Mike Robinson:Expensive and rentals are expensive. Yeah. But I'm like, yeah. But if you're the owner of that building Yeah. And inflation is putting pressure on your costs
Scott Richardson:Mhmm.
Mike Robinson:Why would you not increase the rent? Mhmm. Like, if you're gouging, that's one thing. But, like, if you've mortgaged that property and your five year term is up Right. Yeah.
Mike Robinson:Well, your rent's like, sorry, but the rent's going up. And, yeah, I feel bad for that family. Mhmm. That's and I don't own any rental property, so I'm this is not a Mhmm. Self statement here, but I like, why would you have rent control?
Scott Richardson:Mhmm.
Mike Robinson:And then you can't sell the asset. Yeah. Like, here, I can't afford this anymore because they're putting rent control on me. Mhmm. So I'll
Scott Richardson:sell it.
Mike Robinson:Well, who wants to buy it?
Scott Richardson:Well, then you sell it at a loss. And then why and then why would you build a new rental, you know, apartment Right. Complex? Yeah.
Scott Richardson:Actually, when I
Mike Robinson:was in issue.
Scott Richardson:But
Scott Richardson:When when I was in New York, because, my cousin went to school there, one of the things that I'd and this is kinda tying it back to the grocery thing. Mhmm. But one of the things that I remember doing but one of the things that I remember watching that I found fascinating was I was sitting, like, on a patio having a beer, which
Mike Robinson:You'd want to.
Scott Richardson:I I know you'd do that. Yeah. In my natural state.
Scott Richardson:But I I stood and watched because people are coming out of the subway, and they would go right into a bodega.
Mike Robinson:Okay.
Scott Richardson:And, you know, they're walking out of that bodega with two bags of groceries.
Mike Robinson:Right. That's
Scott Richardson:it. A six pack
Mike Robinson:of beer
Scott Richardson:and a thing of flowers. Yeah. And they go to their apartment. And because that's all they have for space. Yeah.
Scott Richardson:Whereas in Alberta, in our 2,000 plus square foot homes Mhmm. We've got a pantry, and we basically recreate a grocery store in our own homes
Scott Richardson:Yeah. Yeah.
Mike Robinson:Of of, you know,
Scott Richardson:we got all the cans facing forward, and, oh, I know I've got four more cans of tomato soup just in case Yeah. We drink one.
Mike Robinson:Well, absolutely. And when the pandemic hit Oh, that was Like, we joked and said, like, well, we we don't actually have to go to a grocery store for, like, a month.
Scott Richardson:You know what?
Mike Robinson:Because we have other than fresh produce, I mean, we have so much food in the pantry and freezer Mhmm. That, yeah, it's not the gourmet stuff that I wanna make. But Will survive. We have a grocery store in our house.
Scott Richardson:You know, one of my favorite, anecdotes from the from the pandemic is, you know, walking through a superstore, and there's there's no flour, there's no pasta, there's no canned goods, there's no toilet paper, of course, famously. Just go to the weird one because, you know, you can kinda you can kinda, like, you can't really make it without pasta or flour, but, you know,
Mike Robinson:you can kinda figure it
Scott Richardson:out without the anyway, whatever. But, then you get to the health food aisle. I mean, as usual, there's no one in it. It's completely full. They've got all the organic stuff Yeah.
Scott Richardson:On there. It's comp and everything's still on sale and expired. Not even the pandemic can get people going down the
Mike Robinson:health food aisle. A couple times during the pandemic that not so smart people are buying toilet paper. Smart people are buying stocks. Yeah. Right.
Mike Robinson:Yeah. Yeah. Everyone's rushing out to buy dried pasta and toilet paper. Yeah. I'm loading up on US equities.
Scott Richardson:Yeah. Yeah. No. Seriously. Like, that was that was a onetime, you know, huge opportunity.
Scott Richardson:Yeah. That I mean, it you know, there was a lot of uncertainty about how how it was gonna roll out and really something else too that, has happened. I mean, you know, within kind of the inflation context is North America has fared a lot better than a lot of other countries. Like, a lot of countries like like China, like South America have are still, you know Yep. Recovering from from everything that happened, during that time.
Mike Robinson:For sure. And, you know, I the last thing we wanna do is turn political, and I'm not it's not this is not gonna be a political statement. But people in Canada, especially Western Canada, are very quick to blame the federal government Mhmm. For inflation. I'm like, well, they didn't cause inflation in France.
Mike Robinson:Mhmm. Like, our federal government did not cause inflation in France, Spain, UK. Japan had inflation for the first time. Exactly. And theirs was actually worse than ours.
Mike Robinson:Yeah. Yeah. Yeah. And then, woah. What do you mean?
Mike Robinson:What do you mean? Well, yeah, those are the those are the facts, not the opinions. Right?
Scott Richardson:Mhmm. Anyway, it's not really
Scott Richardson:the one that I'm looking for. Thing too. Yeah. And this just popped in my head. Sure.
Scott Richardson:Because I'll I'll shop at Superstore too. I know you do. Mhmm. But, one of the reasons I do is because they've got a great rewards program.
Scott Richardson:Yes. PC Optimum. Beautiful. PC Optimum. Yeah.
Scott Richardson:I think that's great. Canadians have a PC Optimum membership or something
Scott Richardson:like that. If you really lean into that Yeah. Like, you can get a lot of money back. Yeah. And so but my question, which I don't know the answer to, is do reward programs come with a cost that everyone's paying for in the grocery store?
Scott Richardson:That's Is
Mike Robinson:it baked in?
Scott Richardson:Is it baked in somewhere? I don't
Scott Richardson:know. That's a great question.
Mike Robinson:Am I paying for am I subsidizing your rewards? You you could be.
Scott Richardson:Right? I think in a way, everyone everywhere that there's a cost saving somewhere, someone else has to pay for it elsewhere for them to meet the margin requirements of the business. So in a way, probably. Yeah. I mean, I I I, if you, yeah, if you if you are not someone who will have a list and you are wanting to just kinda buy things accordingly, like, to to what's on sale, that is a great way to shop, I think.
Scott Richardson:And I I can't remember the exact number, but I think I think that they said that they they put out, you know, a billion dollars of savings for Canadians across, the Loblaws business. Yeah. Like, through PC Optimum.
Scott Richardson:That PC credit card Yeah. Is the only credit card that I own that has no fee. Yeah. And using it when I buy groceries, the amount of extra points that I get Yeah. Like, it's it it's almost a no brainer.
Mike Robinson:I'm I'm gonna add to this discussion, although not on the rewards. Okay. But you guys keep talking about Superstore, and, I get it. Like, my wife goes to Superstore. I don't, but that's it's just personal preference.
Mike Robinson:But we don't actually have a lot of choices. So It's true. When you talk about the price of groceries, well, you have Weston Foods, which is Loblaw's Superstore Mhmm. No frills, all that stuff, City Market. You have Empire Foods, which is Sobeys and Safeway.
Scott Richardson:Mhmm.
Mike Robinson:Costco, Walmart. Mhmm. It's probably another one
Scott Richardson:or two.
Mike Robinson:Savon? Savon is their own
Scott Richardson:as well. Savon is their own.
Mike Robinson:It has a different name, but they Yeah. But it's their own company. So Mhmm. Let's call it six ish.
Scott Richardson:And, in out east, it's Metro.
Mike Robinson:Yeah. Yeah. Yeah.
Scott Richardson:That's fine.
Mike Robinson:And there's different ones in Quebec, but most of them are owned by those entities. They just brand them differently. Yep. So you can't tell me that's not a factor, that you're you have next to no competition. Oh, yeah.
Mike Robinson:Like Loblaws buys Shoppers Drug Mart for the high margin Yep. Cosmetics and prescription business, which I get and appreciate from a investment standpoint. Yep. Like, be an owner of things of that nature. But it is got to be leading to higher profit margins and increased, prices because you have next to no competition.
Mike Robinson:Mhmm. Just like our airlines
Scott Richardson:and
Mike Robinson:wireless, or landline. Like, all our telecom, you have three choices.
Scott Richardson:Yeah. No. We're the land of the oligopolies.
Mike Robinson:We're the total land of oligopolies. Banks Canada. Yeah. Airlines
Scott Richardson:Yeah.
Mike Robinson:Railways is total oligopoly. We are price takers Yeah. For sure.
Scott Richardson:That we talked about that yesterday about, like, in my opinion, not not, again, not to take it too political, but that's could be one of the benefits that comes with Trump's tariff threat
Mike Robinson:Mhmm.
Scott Richardson:Is that, you know, we've got when NAFTA was created, it was, you know, free trade both ways. But then Canada said, well, hold on a second. We're gonna you can't bring your telecom companies in here. You can't bring dairy in here. You can't do this.
Scott Richardson:And look at And Yeah.
Scott Richardson:The US is a little miffed at that. Mhmm. And so I think this tariff thing, what ends up happening is probably some sort of renegotiation. Right. It's just a threat.
Scott Richardson:It's just a threat. I but I think the renegotiation is, well, from a Canadian standpoint, like, I don't wanna lose access to the largest economy in the world. Mhmm. So sure. Like, the answer is is, okay.
Scott Richardson:We'll open it up if you wanna bring in your, your telecom, your whatever, your airlines. Mhmm. Now we're gonna have competition Well, I which could help the consumer in in bringing those prices down because
Mike Robinson:The problem to protect it. Problem's gonna be I mean, maybe this is the wrong we don't need to go down this path, but, you know, telecom's an example or airlines as example too where k. So a US telecom company says, yeah. I'd like to do business in Canada. Mhmm.
Mike Robinson:Well, they don't wanna do business in, like, Northern Saskatchewan.
Scott Richardson:Yeah. They want they want Toronto downtown Exactly. Yeah.
Mike Robinson:Calgary, Vancouver, Toronto, Montreal.
Scott Richardson:Yeah. No.
Mike Robinson:So then you start building a very uneven playing field, which I'm not saying is wrong. I I'm not saying it's right or wrong. But then you're gonna have a government say, well, we can't let people in Calgary fly to Montana for $76 when people who live in, Prince Albert can't.
Scott Richardson:Yeah. And this is really relevant especially today because, like, you know, BCE just announced that they're buying some US, you know, fiber assets.
Mike Robinson:Yeah.
Scott Richardson:And, yeah, like, I I you know, I don't know I don't know the exact regulatory framework of how a US entrant would work into Canada, but I believe you're right. Like, it is quite restrictive. But now, you know, they haven't historically gone into The US. You know, our Canadian banks love to buy US assets. Telecoms haven't really done that.
Scott Richardson:So that will that will be really interesting. But, yeah. And and in the grocery space
Mike Robinson:It is cost prohibitive for companies Yeah. To build cell towers Oh, yeah. Across a country our size that has next to no people. Yeah. So US companies are gonna say, yeah.
Mike Robinson:I'll build cell towers in Toronto, Vancouver, Calgary, Montreal.
Scott Richardson:Mhmm.
Mike Robinson:But I'm not building cell towers in in Prince Rupert.
Scott Richardson:Yeah. But does that create an opportunity for a business to thrive in and be the we're the small community business?
Mike Robinson:Yes. That that's Home Hardware. Yeah.
Scott Richardson:Mhmm.
Mike Robinson:Home Hardware does quite well. They can't compete against Costco, Lowe's, and Home Depot in Toronto, but they can in Midland, Ontario or in Prince Albert, Saskatchewan or Mhmm. You know, Prince George. Yeah.
Scott Richardson:Yeah. And the other thing too, like like, we have, I think, you know, super like, Loblaws has about a 30% market share in grocery tonnage. I believe the next one would be Empire at 20, and then, you know, Walmart, Costco is, you know, low double digits, high single digits. So, you know, it's like we we had a lot more different types of grocery stores Twenty years ago, you might have a lot of, like, local players Yeah. Small mom and pop shops.
Scott Richardson:But how do you compete with the purchasing scale of a of a company that's doing, you know Yeah. $4,050,000,000,000 dollars, purchases every year? They can compete down the cost dramatically. And, ideally, they can pass those savings on to the consumer. But I I think that the thing that, we don't really see in Canada a lot like, it's not like we've got you know, it's not like the grocery stores have these huge profit margins.
Scott Richardson:They don't. They don't. It's not like the telecoms have really tremendous profit margins either. But you don't you what you don't see is the effects of competition on cost. Like, I'm sure Loblaws could run a lot more more efficiently if there were people who are making them try to run more efficiently.
Scott Richardson:I think I think Walmart and Costco has kinda forced that a little bit because those are, you know, newer to to Canada. Yeah.
Mike Robinson:Oh, I I'd say you're probably right a little bit. Yeah. Like, I don't go to Costco, though. Right. So and there's lots of other like, I have a family of three.
Mike Robinson:I don't need 14 kilogram. I use a blueberry for kids. So Yeah. And I also object to the idea of I have to pay to shop here, but it seems to be working. So I'm in the minority.
Mike Robinson:But, yeah, I I I agree. Like, if you you increase competition, people have to up their game.
Scott Richardson:Yeah. There's just no Yeah.
Mike Robinson:Yeah. Well, it's it's And they can innovate, and they can. Like, they are capable. Yeah. We know that.
Mike Robinson:We know durable durable businesses. Right? Like, Weston Foods is a very durable business. They would adapt. They would figure it out.
Scott Richardson:Yeah. And there's a lot of really good examples. I mean, this is, you know, not directly related to groceries because I think it's a little bit groceries are always pretty competitive mostly. But, I mean, if you look at some of the best businesses out there, right, like the Ferraris and, you know, Lamborghinis or whatever, you know, they actually competed very, very fiercely if I'm not mistaken. And even, like, actually, like, Novo Nordisk, That used to be two different companies that were down the street from each other doing diabetes research, Novo and Nordisk.
Scott Richardson:And there's a reason why they are the best in the world at doing diabetes and obesity treatments. It's because there was that intense competition. Yeah. So it it can make for not only better outcomes for consumers, but also for for the business itself. Like, Nova would not be nearly what it is today if it wasn't for Nordisk.
Mike Robinson:Yeah. It's big in The US too. A big issue is what I mean. Like, we have roughly six approximately grocery chains.
Scott Richardson:Mhmm.
Mike Robinson:It's about the same number in The US. Yeah. And they have 10 times the population.
Scott Richardson:Well, and in Mexico, it's, you know, 45% you know, we have 30% tonnage on the highest share, player in Mexico. It's 45, at Walmax. Wow. So, you know, it's a lot less it's even less so. Yeah.
Scott Richardson:Yeah. Wow. Mhmm.
Scott Richardson:I didn't know that. Yeah. That's crazy.
Scott Richardson:Yeah. I know. And they there you know, there's there's, you know, I believe Kroger is trying to take out a a competitor as well. I think it's Aldi, in The US as well. So that, you know, that'll just reduce that competition even more.
Mike Robinson:I don't know all the players, but, like, but they are one. And Albertsons
Scott Richardson:is one. Might be might the Albertsons are checking out, actually. I might
Mike Robinson:even I don't know. They're they're a taker too. Yeah. Like but they do the same thing as Weston Foods, which is just brand differently.
Scott Richardson:Mhmm.
Mike Robinson:But I'll so there's Albertsons stores, but there's, like, three other brands, but Albertsons owns them. And I'm just I'm not picking on Albertsons. Like, it's everyone does this.
Scott Richardson:So then is the end game here like, and we we started to kinda talk about it before, but is the endgame here that it's gonna be the consumer that has to drive the change by
Mike Robinson:I believe by
Scott Richardson:making different choices or value decisions and saying, well, no. I'm not paying for that.
Mike Robinson:I I believe that the consumer has the power, but it takes like, that's a slow process. Mhmm. But don't buy $12 blueberries. No. Don't don't buy concert tickets.
Mike Robinson:Like, if and I, you know, forget about Taylor Swift, but even, like,
Scott Richardson:Mhmm.
Mike Robinson:You know, classic rock bands that appeal to our age group and era and stuff, they're, like, a hundred and $40 a ticket. Like, are you kidding me?
Scott Richardson:It's obscene. Yeah.
Mike Robinson:It's obscene. Yeah. But why is it a hundred and $40 a ticket?
Scott Richardson:Because they sell it out.
Mike Robinson:Because they sell it out. Yeah. So don't complain about it. Yeah. Stop buying it.
Mike Robinson:Yeah. Don't buy flames tickets or jets tickets or Oilers tickets. Like, don't the consumer is the one who has to say, I'm not doing this anymore. And you if we do, you they will adapt quickly.
Scott Richardson:Yep.
Mike Robinson:Consumer has the power. Don't buy plating products that are, you know, $15 a bottle Mhmm. When you can buy a no name brand diluted vinegar solution for 6.
Scott Richardson:Yeah. Well and I guess that's that's that mentality thing of, well, that's just the price.
Mike Robinson:That's just yeah.
Scott Richardson:And you have to be able to step back and look at a value play on, okay. Am I getting a hundred and $80 or $12 of value out of these blueberries? Am I getting a hundred and $80 value out of this show?
Mike Robinson:Yeah.
Scott Richardson:You have to be able to make that value decision.
Mike Robinson:And it's different for everybody. I'm not claiming to be mister righteous. Like, I buy $7 bread
Scott Richardson:Mhmm.
Mike Robinson:And I buy wine that costs more than it maybe needs to be. Like, I'm not pretending to be, you know, mister innocent or mister righteous, but those are value decisions. I get value out of that, so I pay, but I don't out of concert tickets. Yep. Right.
Mike Robinson:I don't.
Scott Richardson:Mhmm. But I think to affect change, it's gonna have to be more of an education thing Yes. And a concerted effort.
Mike Robinson:Pay attention.
Scott Richardson:Paying attention because otherwise, you just become a price taker and it's nothing's gonna change. Yeah.
Mike Robinson:Look at the coupon wall.
Scott Richardson:Look at the coupon wall.
Scott Richardson:Awesome.
Scott Richardson:Yeah. I think that's great.
Scott Richardson:That's good. Yeah. I'm done with that. That was awesome. Thank you, gentlemen.
Scott Richardson:Everything in this podcast is meant for entertainment and educational purposes only. It is not financial advice. And all the opinions that we express in this podcast are not necessarily the opinions of the companies that we work with or affiliated with. So bear with us while we discuss these topics and remember that financial and investing decisions are different for everyone, and you should consult a financial professional or do your own research before doing anything for yourself. Well said.
Scott Richardson:Thank you. I also like
Mike Robinson:to say, trust me, when I'm giving you financial advice, you will know it. It will be one on one and in person, and it will be clear that this is financial advice. This is not.
Scott Richardson:You will know exactly what I'm talking about. Yeah.