RMG100 - FALL 2021

Retail Management – Issues and Innovations in Retail

ASSIGNMENT #8

MID -TERM EXAM

Enter the Word Count for Each Question

Question 1 Word Count # 495

Question 2 Word Count # 500

Question 3 Word Count #496

The Competition Bureau in Canada is understood for being responsible for analyzing

companies and determining solutions and agreements to protect consumers and businesses
from anti-competitive activity. When the acquisition of Shoppers Drug Mart Corp. by Loblaws

Co. Ltd. came about and the Bureau stepped in to analyze the situation. As a result of this

merger Loblaws would be the largest grocer & drugstore retailer in Canada (Yeates &

Hernandez, 2021, #6). Though with this much power could lead to higher prices for their

consumers. Negatively impact competition, and have an influence on its current relationships

with suppliers. The Competition Bureau devised an agreement that includes a five year

prohibition. Which in hopes prevents Loblaws from receiving financial compensation based on

the volume of suppliers sale of products sold. Pricing for consumers and competitors is

important because if large companies like these drive prices up too high, the competitors have

a hard time keeping up. In addition, consumers are now put in a position where they have to

pay even more money for their products, which understandably has a negative effect on a

business. The competition Bureau has helped in the way that they have ensured companies in

this situation are not going to increase their prices which would have had a negative effect on

the consumers and competitors.

The acquisition of Jean Coutu (PJC) Group by Metro Inc. Metro is a large grocery and it

has announced its agreement to acquire PJC. After analyzing the situation and possible merger.

The bureau has decided that in regards to pricing of prescription drugs, Metro would have the

ability if merged to modify prices both up and down stream. They found that since Metro

would have such a large influence there would be a loss in rivalry between the two brands. The

Bureau has put these measures in place to ensure there remains fair pricing and a sense of

competition in the market. The Competition Bureau has helped in the way that they are

ensuring that there is still a sense of fair pricing and competition within the market.
 Acquisition of Rona Inc. by Lowe’s Companies. In the home improvement industry

Lowe’s has put forth a merger, though before it could be completed. The Bureau has stepped in

to give the situation a good look through to develop a plan that is in the best interest of the

company of course but also other competitors and consumers. After analyzing the competition

and keeping in mind pricing, the Competition Bureau came to a positive conclusion for both

parties. They determined that due to the current number of competitors in the local market

they are in the Home Improvements sector such as Home Hardware, Home Depot, Canadian

Tire. There was no threat or in other words it was unlikely to lessen competition (Yeates &

Hernandez, 2021, #7). The Competition Bureau helped in this situation by analyzing the

competition and ensuring that other companies in the Home Improvement industry could still

be active participants.

The ‘Big Middle’ model operates as generally the most significant marketspace in which

large retail giants compete for dominance in consumer expenditures (Yeates & Hernandez,

2015, #2). The competition is so prevalent for this model because this is where the largest

population of potential consumers reside. This model is broken down by taking companies and

analyzing their products at a certain price and level of quality provided that it is widely

understood that the products are generally accepted by the public. The Y axis ranges from low

to high in quality, and the X axis ranges from low to high relative to price. Figure 1.1 is the ‘Big

Middle’ model.

Figure 1.1
 Companies who are located in the lower

left section offer low prices and low

quality, their customers are content with

receiving limited quality in return for the

great prices. This section is known as the

Value/Discount section. Companies that

belong here are ones like Dollarama.

Across from this is ‘High-end’, these are

companies that have high levels of quality and price in their products. Companies like Prada.

The model also operates as a way to tell what the state of the company is. For example whether

the company needs to reposition, and or is vulnerable to having to exit the retailing industry.

This conceptual model to access the retail landscape has many benefits for retailers. As

mentioned it can inform you whether your company is in danger or whether you need to

reposition. An indicator for threat of danger or becoming vulnerable is when your prices are

too high and quality is too low (bottom right). But this can tell them that they need to rethink

current ways, and make decisions to remove themselves from this origin, either increase

quality, or decrease prices. Another positive is the company's ability to tell if they need to

reposition in terms of charging a little too much or providing a little more quality. This is a

great way to even out your company and ensure it stays in the middle range. The middle range

meaning it is generally level in regards to quality in comparison with price. The model helps to

ensure a company remains viable.

 Lack of information provided by an industry impacts the ability to effectively complete

an analysis of using the ‘Big Middle’ model in all aspects of product sales. The automotive

industry specifically is limited. The model is restricted to only using data that contains the

units sold. This is because the industry does not make information based on the dollar sales for

‘low-price’, ‘mid-price’, and ‘high-price’ categories available to the public. Comparing price

and quality is difficult when we do not know how much products sales amount to. The

information that is provided for ‘mid-price’ and 'high-price’ is great to know for automotive

companies, it can help to figure out position and strategy. Unfortunately, without the full

picture, it is not possible to make an inclusive model using each of the three price sections.

In my opinion I believe the shape of the recovery in total retail sales (NAICS 44-45) in

Canada is a V-shaped recovery. I believe this is the case because the data takes a plunge from

51,412,572 in August 2019 to a low of 34,958,578 then returns to where it started . After it had hit

this point it continued to grow and reach a high of 57,211,019 in August 2019(Statistics Canada

2021). The reason why the economy dropped is due to the pandemic and as a result the

economy has permanently lost activity in this period. Following the definition of the V-shaped

recovery the Canadian economy has recovered since this drop and its trends are currently

representing growth.

The overall trend for the General Merchandise stores was consistent in growth. In

February 2021 it increased to 7,092,540(Statistics Canada 2021). This in my opinion was a result

of the lockdown we were put in. There was not much citizens were allowed to do though with

the slow reopening of general merchandise stores it was really all people could do to get out of

the house. In April and May there was a big drop and this I believe is due to the increased cases
in Canada. It was announced Canada had more cases per million than the USA. This

information scared people into staying home. After this month the trends began to increase

and growth continued . This is due to the lockdown being lifted in the beginning of June 2021.

Food and Beverage stores saw a quick decrease to 10,370,339 in January then by March it

had reached a high of 13,316,013. The reason in my opinion for this sharp increase is due to the

beginning of lockdowns occurring in many Canadian provinces. People were very concerned

that grocery stores would also close, so they scrammed and stocked up. Buying more product

than needed, in hopes to last them for as long as possible. That is why we saw a spike in the

month of March. Then as the months went on people soon realized grocery stores would not

be closing nor were they running out of inventory. This was represented as the following

months after the spike was pretty steady.

The data for clothing and clothing accessory stores saw a decrease in April/ May 2020.

This was when Canada went into lockdown meaning all clothing retailers were closed. I believe

this period in time was an adjustment for not only the retailers but consumers. People were

more scramming to get essentials like food and toiletries rather than clothing. Since we were

going into a lockdown without an end date, many people did not see the need to buy new

clothes since there was nowhere to wear them. As well as an adjustment for retailers as they

had to either begin the transition online or focus on building a bigger and more secure

ecommerce.
 References

Statistics Canada. (2021, October 22). Retail Trade Sales By Industry. Statistics Canada. Retrieved

October 26, 2021, from

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2010000802&pickMembers%5B0

%5D=1.1&cubeTimeFrame.startMonth=08&cubeTimeFrame.startYear=2019&cubeTime

Frame.endMonth=08&cubeTimeFrame.endYear=2021&referencePeriods=20190801%2C

20210801

Yeates, M., & Hernandez, T. (2015). The Canadian 'Big Middle' And Retail Competition. Center

For The Study Of Commercial Activity, 13.

file:///C:/Users/emmec/Downloads/CSCA_2015_The_Canadian_'Big_Middle'_and_Retai

l_Competition.pdf

Yeates, M., & Hernandez, T. (2021). Retail Concentration In Canada and The Competition

Bureau. Center For The Study Of Commercial Activity, 12.

file:///C:/Users/emmec/Downloads/CSCA_2021_Retail_Concentration_and_the_Compe

tition_Bureau.pdf