For most Canadians, the grocery system is judged at the checkout. Affordability is the clearest test of whether it is working. By that measure, many Canadians believe it isn't.

What is less visible is why. It's not from a lack of concern for Canadians’ needs. It is about a system whose structure no longer reliably delivers the affordability and stability Canadians expect.

For decades, Canada’s grocery system broadly worked. It moved food efficiently across a vast geography, supported domestic suppliers, and delivered stable access at competitive prices despite higher logistics costs and a relatively small population. Affordability was not just about prices in any given week. It was about stability over time. The system could absorb shocks, support investment, and renew itself.

That alignment has eroded.

Over time, retail consolidation, rising fixed costs, global disruptions, and accumulated policy choices have reshaped how value, risk, and pressure are distributed across the supply chain. Canada’s grocery market is now among the most concentrated in the developed world. The top five grocery retailers account for more than 80 percent of sales, and the top two account for more than half. This level of concentration did not occur by accident. It was permitted by policy choices made over time, and it now shapes how the system functions.

In a highly concentrated, low-margin environment, pressure does not disappear. It moves.

Canadian retail grocers operate with thin margins and significant fixed costs. Labour, rent, transportation, energy, and compliance leave limited room to absorb rising costs internally. When cost pressures increase, they are increasingly managed through upstream mechanisms focused on the supplier community, including commercial requirements, shorter planning horizons, delayed payments, heightened listing fees, and greater delisting risk.

These decisions can be interpreted as rational at the firm level. They preserve cost stability and enhance shareholder value in a low-margin environment. But when pressure is consistently transferred rather than shared, the system as a whole becomes less capable of delivering affordability over time.

For many manufacturers, costs of goods sold rose sharply in recent years and have not fully reset. Fixed operating costs, compliance requirements, financing pressures, and risk premiums remain elevated. At the same time, Canadian operations of North American and global manufacturers typically operate at materially lower profitability than their U.S. counterparts. This reflects smaller scale, higher logistics costs, and a higher cost-to-serve in a highly concentrated retail environment.

Those dynamics shape behaviour. When returns are lower and commercial risk is higher, investment decisions change. Expansion is delayed. Product lines narrow. Smaller and mid-sized firms struggle to scale. Capital is increasingly deployed outside Canada, not because demand is weak, but because predictability and returns are stronger elsewhere.

Small and medium-sized manufacturers feel these pressures even more acutely. Unlike large multinationals, SMEs have limited balance sheets and far less capacity to absorb sudden commercial requirements, invoice deductions, delayed payments, or shifting listing conditions. They also lack the scale and internal resources to dispute charges or fund unpredictable cost-to-serve demands. As pressure intensifies in a highly concentrated retail environment, the impact on SMEs is not incremental. It is immediate. Cash flow tightens, innovation slows, and the ability to scale becomes constrained. Over time, that means fewer new Canadian brands, fewer differentiated products on shelves, and fewer credible challengers entering or expanding within the system, precisely the opposite of what a competitive grocery market needs to deliver affordability for consumers.

Affordability rarely breaks all at once. It erodes. Prices become more volatile. Choice narrows. The system becomes less able to absorb shocks and more likely to pass pressure forward unevenly. Canadians experience this not only in what they pay, but in growing uncertainty from one grocery trip to the next.

Canada’s grocery system is particularly vulnerable to this dynamic. High market concentration, thin margins, high logistics costs, and limited scale mean that decisions that make sense in isolation can collectively undermine affordability over time.

Highly concentrated markets also struggle to renew themselves. Without credible pathways for entry, expansion, or alternative routes to market, competition becomes static rather than dynamic. Over time, that weakens downward pressure on prices and limits innovation that could benefit consumers.

The challenge Canada faces is not whether affordability matters. It clearly does. The question is whether the current structure of the grocery system supports affordability over time, or gradually erodes it.

Rebuilding alignment doesn't mean forcing divestments or dictating prices. It means restoring the conditions that allow competition to function, investment to flow, and the system to absorb pressure rather than transmit it. More effective competition, better pathways to scale, and a regulatory environment that supports long-term investment are not ideological positions. They are pro-consumer outcomes.

Affordability is not just a number on a receipt. It is the outcome of a system designed to sustain choice, competition, and domestic capacity over time. If Canadians want a grocery system that delivers affordability they can rely on, the structure of the system must once again be aligned with that goal.

This op-ed was originally published on LinkedIn.