Jan 5, 2018
What Loblaw wants in exchange for its $25 gift card
Starting Monday, Canadians can register for a $25 Loblaw gift card. The company is offering the card to compensate customers after it admitted to a bread price-fixing scheme over a 14-year span ending in 2015. As many as six million cards are expected to be issued, costing the grocery giant up to $150 million. Below, BNN takes a look at three things Loblaw may be hoping to get in exchange — and one way the company’s plan could backfire.
YOUR FORGIVENESS
“The money is more symbolic of trying to provide some support to their apology,” Sylvain Charlebois, dean of Dalhousie University’s Faculty of Management and among Canada’s leading food industry experts, told BNN via telephone. “Loblaw is going to need to do way more than just give a $25 gift certificate [because] it is not just about compensating customers, it is about revisiting its social licence with the public.”
The actual amount Loblaw is offering doesn’t matter, Charlebois argues, “because the brand has been damaged. The gift card is meant to hide a much more problematic issue that relates to customer trust.”
YOUR LEGAL RIGHTS (MAYBE)
Lawyers behind a proposed class action lawsuit against several companies including Loblaw are urging Canadians to “read the fine print, and make sure you’re not giving away any rights to take part in the class action in exchange for what is basically a coupon to a grocery store.”
Loblaws insists signing up for the card will not prevent anyone from participating in any current or future potential lawsuits.
“Accepting this offer will not affect customers’ right to participate in any class action or to receive any incremental compensation that may be awarded by the court,” a company spokesperson told CTV News last week.
YOUR MONEY
“For everyone wanting to redeem the gift card they will likely spend over $25 so it is a PR spin from Loblaw,” Charlebois told BNN. “It is hard to understand or appreciate just how badly customers were burned financially.”
Statistics Canada data shows the average Canadian family spends roughly $120 per week at grocery stores, suggesting the move could indeed be part of a plan to get more Canadians to spend more money at Loblaw’s stores.
The amount is also arguably just a fraction of the cash Loblaw pocketed by overcharging on bread for 14 years. Maclean’s crunched the numbers and found if Loblaw had inflated prices by just 10 per cent, then a Canadian who purchased one loaf per week over that 14-year period would have been gouged for nearly $200 in total.
For the $25 gift card to be proportional to the average customer’s loss, the price hike could not have exceeded one per cent.
HOW IT COULD BACKFIRE
It is entirely possible Canadians will not forgive Loblaw, will not give it more of their money, and will not forgo their legal right to sue — but will take the card anyway and give it away to those in need.
There are multiple campaigns online urging Canadians to sign up for the gift card for the sole purpose of donating them to local food banks across the country.
A Loblaw spokesperson told CTV News that donating the gift cards would be a “lovely idea” before immediately suggesting card holders should still go to their local Loblaw store: “With the card in hand, customers could easily buy food for themselves or for a food bank.”
