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Gifts are not free

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There is nothing free in life, they say. Retail loyalty programs that allow us to accumulate points that can be converted into gifts are no exception to the rule. Suppliers from Metro, Super C and Jean Coutu have just learned how much the new MOI program, which will be launched in the spring, will cost them. A surprise bill that accentuates discontent and disenchantment.

Ironically, Metro’s announcement comes at a time when the unveiling of a code of conduct to clean up relations between supermarkets and their suppliers is imminent, according to my information.

A Quebec company that supplies Jean Coutu has learned by email that it will have to fund part of the costs of the MOI program through a new 1% fee.

In other words, the invoices it sends to the retailer will be systematically reduced by 1% sometime in May. This unilateral decision is imposed without any negotiation, denounces the general manager of the SME, who refuses to be named so as not to worsen his relations with Jean Coutu and its owner Metro. Air Miles never cost him a penny.

“They force it down our throats. It makes for strained relationships. In the long run, this causes local manufacturing to crumble,” denounces this leader.

Unable to absorb this loss of income, this leader will try to increase his prices, which will have repercussions, he laments, on consumers already hit by inflation.

An opinion shared by other suppliers. ” Exactly ! It’s always the consumer who pays, in the end,” said one of them.

Soon, Metro, Super C, Jean Coutu and Première Moisson will adopt the new MOI loyalty program, replacing metro & moi and Air Miles. Adonis will also accept the card eventually.

In the food sector, two SME owners have learned in recent days that MOI will cost them twice as much as metro & moi, or 0.6% of total sales, rather than 0.3%. They don’t digest it.

The upside may seem small, but in a low-profit-margin industry, every tenth of a percent counts. Particularly in times of labor shortages and high inflation, both for ingredients and for packaging and transportation.

Another SME instead saw its rate drop from 0.4% to 0.6%. It’s not much, but enough to accentuate the disillusionment, his representative told me. His sentiment is shared. One entrepreneur told me that he no longer reads emails from Metro and other chains because “it’s too discouraging” to find out about fee hikes.

At Metro, it is rather stated that “the fees are justified and negotiated in good faith with each supplier individually”, which explains why the rates vary.

Some vendors we contacted have not received recent news from Metro. But they weren’t surprised that the arrival of MOI caused costs to rise for suppliers. “They are always eroding our margins,” one respondent, referring to large supermarket chains in general.

These increases are in addition to a series of other fees imposed by the big chains and denounced from all sides for years because of their “arbitrary” nature.

In October, Metro increased fees for unloading trucks coming into its warehouses, while Loblaw increased its fees “for handling goods.”

This is precisely what the new code of conduct is supposed to frame in order to offer some predictability to suppliers and a better balance of power.

Metro maintains that the new agreements concerning MOI “are entirely consistent with the spirit of the code of conduct”.

To promote the benefits of MOI, Metro held webinars and sent a “confidential” presentation to suppliers. It says that the new program will give them visibility and stimulate sales of their products thanks to bonus points “on shelves and in flyers”. Consumers will also receive weekly personalized offers and a “digital booklet” promoting new or seasonal products twice a year.

“In addition, 100% of points redeemed will be for vendor products sold in-store unlike other rewards programs. This therefore translates into additional sales for our suppliers,” points out Metro’s vice-president of public affairs and communications, Marie-Claude Bacon.

It remains to be seen whether these initiatives will be significantly more effective than those of metro & moi, already well targeted and appreciated by its 1.2 million members. Improvements should be easier to achieve compared to Air Miles.

But suppliers are more than skeptical. They don’t believe that ME will make a marked difference in their lives. “We don’t sell more thanks to loyalty, but thanks to our price”, says the owner of a food processing company.

Metro is not the only retailer to impose fees on its suppliers to support its loyalty program. Loblaw (Maxi, Provigo, Pharmaprix) also does it for PC Optimum, but refuses to give an idea of ​​the invoice.

On the side of Sobeys (IGA), we are preparing to launch in Quebec the Scène+ program, which has been partly owned by it since June 2022. Suppliers are currently being solicited to join various plans of the program which cost, according to a food broker, between 1% and 1.5%. It is not mandatory, but strongly suggested.

No transfer date from Air Miles to Scène+ in Quebec has yet been specified.

It was not possible to learn more about the transition and its impacts on suppliers from IGA, which prefers not to comment on the agreements reached with its partners.

This story is reminiscent of the fees charged by credit card issuers to retailers. These fees – particularly high in Canada – inflate selling prices, even for customers who pay cash. In supermarkets, everyone pays for the “free” loyalty programs.

Some don’t like the idea of ​​their shopping habits being tracked, others fear identity theft, which is legitimate. But the moment you pay for something, you might as well enjoy it, especially in these inflationary times when you’re looking for ways to save.



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