Attention Loblaws Shoppers: Economic nationalism for sale in Canada’s retail history

By Katharine Rollwagen

Loblaw Groceterias Limited, store No. 1, 2923 Dundas St. W., Toronto, Ontario, ca. 1919. Postcard. Source: Wikipedia Commons

Loblaw Groceterias Limited, store No. 1, 2923 Dundas St. W., Toronto, Ontario, ca. 1919. Postcard. Source: Wikipedia Commons

On July 15, 2013, the chairman of Loblaw, Canada’s largest supermarket retailer, announced the company’s purchase of Shoppers Drug Mart, the largest pharmacy chain in the country. The merger of two of Canada’s most recognizable retail brands was quickly hailed as a mega-deal that will create a “homegrown juggernaut” – a $12.4 billion acquisition that positions the merged company to compete with the growing tide of American-owned competitors such as Walmart and Target. It also keeps Shoppers Drug Mart out of the hands of other American suitors such as Walgreens (as commentators noted here).

As a historian, news of the deal and the rhetoric of economic nationalism that followed brought to mind another merger that reshaped the Canadian retail landscape more than 60 years ago. The marriage in 1952 between Canadian retailer Simpsons and the American department store Sears, Roebuck and Company was justified at the time as an attempt to compete with Canada’s largest retailer – Eaton’s, which garnered nearly as much of the retail market in Canada in the 1930s as Walmart does in the United States today.[1] However, despite Eaton’s dominant size in the Canadian market, it was the American company, Sears, that some of those involved in the deal feared would be seen as the enemy of Canadian enterprise.

Just as proponents of the Loblaw-Shoppers deal have played up the nationality of the companies involved, keeping Simpsons “Canadian” was similarly seen as important from a public relations perspective. Simpsons feared a backlash from Canadian consumers, so the deal stipulated that existing Simpsons stores located in Toronto, Montreal, Halifax, Regina, and London, Ontario, would remain unchanged, and any new Simpsons-Sears stores would have to be built a minimum of 25 miles away. The new company also stated publicly that its management would remain Canadian. Eaton’s, in response, jumped at the opportunity to highlight the supposed difference between its sole-Canadian ownership and the part-American Simpsons-Sears, adopting the moniker “Eaton’s of Canada.”

While the context of the retail marketplaces then and now are different, both the Simpsons-Sears and Loblaw-Shoppers Drug Mart deals were motivated by location, location, location. The terms of the Simpsons-Sears partnership meant that the company built new stores in the suburbs just as a growing number of car-driving Canadians were moving out of urban areas. In many cases, Simpsons-Sears stores anchored shopping malls and shaped today’s suburban landscape. Loblaw, on the other hand, is apparently interested in Shoppers’ smaller downtown stores, seeing an opportunity to sell groceries alongside regular drugstore products to the growing number of urban-dwelling Canadians. In both eras the deals were heralded as being beneficial for Canadians because of the increased market share of the newly-formed entity. During the early 1950s Macleans reported that Canadians would surely pay less for products at Simpsons-Sears because of Sears’ extensive supply chains, while pundits today believe the recent deal will give Loblaw the purchasing power it needs to compete with the big American retailers.

Economic nationalism has a long history in Canada, as historians have demonstrated (see Further Reading, below). From Roots to the Bay and Molson to Tim Horton’s, patriotic rhetoric has played and continues to play a crucial role in Canadian corporate branding. However, less obvious behind the nationalist sales pitch are the concrete consequences of corporate mergers and “buying Canadian” for consumers – both today and in the past.

In a globalized economy, how much does the location of a head office matter? Is it important for Canadians to have a Canadian-owned grocery and pharmacy chain to take on American competitors? Or do Loblaw’s business practises matter more, such as outsourcing production to low-wage countries with dangerous working conditions? Such conditions have led to tragedies, such as the Rana Plaza garment factory collapse in Bangladesh, which killed hundreds of women as they sewed Loblaw’s Joe Fresh-branded clothing.

Sixty years ago Eaton’s was (proudly) a Canadian company that manufactured its own branded lines of goods in local factories and employed thousands. Yet it also faced accusations of pushing suppliers out of business during the Depression of the 1930s, and investigations for profit-mongering and poor labour conditions by the Royal Commission on Price Spreads during the interwar years. The company’s paternalism towards employees and animosity towards unions was unyielding. At the same time as Eaton’s wrapped itself in the flag in response to the Simpsons-Sears deal, it witnessed intense pressure from the Canadian Congress of Labour to allow its 12,000 Toronto employees to organize. The Eaton Drive lasted four years. The Eaton’s family and management fought it hard, as they had several previous unionization attempts. This side of the Canadian company was barely remembered in the sometimes-nostalgic eulogies that followed the company’s bankruptcy and sale in the late 1990s. Simpsons-Sears, on the other hand, claimed that eighty-five per cent of the goods it sold would be produced in Canada, and offered employees a profit-sharing scheme.[2] Which company was really “better” for Canadians? Or was it the competition between them that benefited consumers?

Walmart and Target are certainly not the initial volleys of an “American invasion” into the Canadian retail marketplace. Change is the only constant; indeed to some it is even seen as desirable in the relentless pursuit of greater profit margins. But what is clear from the case of the Simpsons-Sears partnership to compete with Eaton’s is that in assessing the meaning of corporate mergers for Canadian consumers, we need to move past nationalist rhetoric and examine the complex consequences for workers and consumers both in Canada and around the world.

Notes

[1]    Richard Matern and Joe Martin, “Eaton’s: From the Great Depression to the Challenge from Simpsons-Sears,” in Joe Martin, ed., Relentless Change: A Casebook for the Study of Canadian Business History (Toronto: University of Toronto Press, 2010), 157-158.

[2]    Matern and Martin, 149-150.

Further Reading

Donica Belisle, Retail Nation: Department Stores and the Making of Modern Canada. Vancouver: UBC Press, 2011.

Joe Martin, ed., Relentless Change: A Casebook for the Study of Canadian Business History. Toronto: University of Toronto Press, 2010.

Catherine Carstairs, “Roots” Nationalism: Branding English Canada Cool in the 1980s and 1990s.” Histoire Sociale/Social History 39_77 (2006), 235-255.

Steven High, “’I’ll Wrap the F*** Flag Around Me’: A Nationalist Responses to Plant Shutdowns, 1969-1984.” Journal of the Canadian Historical Association 12:1 (2001): 199-225.

Robert M. MacGregor, “I Am Canadian: National Identity in Beer Commercials.” The Journal of Popular Culture 37:2 (2003): 276-286.

Steven Penfold, The Donut: A Canadian History. Toronto: University of Toronto Press, 2008.

Katharine Rollwagen is an L. R. Wilson Assistant Professor at the Wilson Institute for Canadian History at McMaster University in Hamilton, Ontario.

2 thoughts on “Attention Loblaws Shoppers: Economic nationalism for sale in Canada’s retail history

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