On April 6, 2021 Statistics Canada released their report on the changes in Canadian retail margins for 2020. This is not a retail selling price or the actual mark-up. The Retail Services Price Index (RSPI) measures the change in margins between the average purchase price and the average selling price of the retail products. See Retail Services Price Index (RSPI) Methodology below for more details.
We believe that the growing tension between suppliers and retailers that this data will help answer is: “ Who is paying?”
Comments by Statistics Canada
Gasoline stations (+19.3%) contributed the most to the gain, recording the largest year-over-year increase since the introduction of the index. The margin rose as the decline in vendor prices outpaced that of retail prices.
(Note: Most Gasoline producers own and set retail prices for their retailers.)
Food and beverage stores (+3.1%) and health and personal care stores (+5.6%) also reported year-over-year margin gains.
Lower margins at building material and garden equipment and supplies dealers (-0.4%) moderated the year-over-year increase of the RSPI.
Who’s paying?
Suppliers have been pushing for the government to intervene since Walmart Inc. and Loblaw Co. Ltd. started charging their suppliers controversial fees last year to help cover investments in online grocery shopping during the pandemic. But suppliers have had other concerns for years. The big-box chain infuriated its suppliers this summer by announcing new fees to help cover its $3.5-billion infrastructure upgrade. Those fees — 1.25% charged on the costs of goods suppliers sell to Walmart, plus another 5% on goods sold into its e-commerce channel.
Manufacturers have been pushing back in discussions with Walmart, but a common response has apparently been: “Pay it or don’t ship.” Financial Post, March 30, 2021
Are fees included in the Retail Services Price Index (RSPI) calculation?
- Are fees included in the vendor price?
- Are the controversial investment fees even included in the Retail Services Price Index (RSPI)?
We have sent these questions to Statistics Canada and are awaiting their reply. We will keep you informed.
Retail Services Price Index (RSPI) Methodology
Sampling
Every enterprise selected for the Retail Trade Price Report survey reports a maximum of twelve products. Respondents select products that are representative of their retailing activity, chosen based on either contribution to annual sales or sold regularly throughout the year. If chosen participation is mandatory.
Prices
The price of the retail service is defined as the margin price, which is the difference between the average vendor price and the average retail price of the retail product being priced. It is not a retail selling price.
