Cut consumers a break, NTI says
Cathy Towtongie campaigns to reduce cost of basic life essentials
Cathy Towtongie, president of Nunavut Tunngavik Inc., wants the Northwest Company Ltd., which owns NorthMart in Iqaluit, to give customers a break.
Exorbitant prices on perishables like fresh produce, cheese and milk, and other essentials such as diapers, sugar and flour may be the status quo in remote northern communities, but not one Towtongie wants to maintain.
In a Feb. 24 letter to Edward Kennedy, president and CEO of the company, Towtongie suggested Northwest “consider reducing the price of basic life essentials … and increase the price of furniture and larger items to counteract the decrease in revenues from staples.”
The high cost of perishable items is due to the fact they require refrigeration, special handling and have the highest spoilage rate.
Kennedy said the company shares NTI’s concern, and that it has tried to manage the situation for several years. But cutting costs on expensive goods isn’t as simple as reducing prices, he explained.
“Cost prices are high, and now we have fuel-related inflation affecting the North this year. Some of the commodities that [Towtongie] is mentioning we’re already selling below cost, things like milk, bread and eggs. It’s been like that for quite some time. That requires taking higher mark-up on other goods,” Kennedy said.
“The real issue, we feel, is more structural. It has to do with the cost of freight and goods and operating costs in the North. We encourage NTI and the GN to work with us on what other solution there might be. Are there possible federal or territorial programs that might provide offsets?”
A federal postal subsidy system is already in place for perishable foods in parts of the Arctic. Currently, the government is running a test in two northern communities to determine if a higher subsidy will improve the sale and pricing of certain commodities, Kennedy said.
“We are watching that with interest because we have stores in those communities,” he added.
The effort to keep costs low on perishable goods is further complicated by outside competition in the sale of non-perishable goods.
“In non-perishable items there’s heavy out-shopping. There’s a lot of patronage going out to retailers that don’t invest in the community or the North. That trend has increased significantly over the last 10 years,” Kennedy said.
“The reality of high costs are something that won’t go away overnight.”
The company has invested tens of millions more than it’s made, Kennedy pointed out, adding the money Northwest has invested in the past three or four years on refrigeration to expand its produce section has had mixed results because of the price of produce.
“We’ve invested heavily to try to earn a bottom line, but it’s not exorbitant if you compare it to other retailers.”
The perception that there’s a golden goose is sometimes an easy one, Kennedy explained, and he understands the frustration of living in the North.
“It would be easy to say that there’s someone that’s making a lot of money, but it isn’t quite like that at all. Everyone’s trying to run a competitive business, and it’s in everyone’s best interest, especially in the North, to try to expand the loyalty of your shoppers. So you want to do that by bringing them more and more competitive prices — not the other way around.”
But, it’s going to take some collaboration with NTI, the GN and the federal government to look at the cost of living in northern Canada, Kennedy emphasized.
“We’d love to be part of that discussion. We think we have a role to play by sharing information and essentially opening our books and letting people understand the cost factors that influence pricing in the North.
“Once everyone has that common fact base, we think there should be room for some public policy solutions.”