Bread prices are down, so what’s Loblaw’s $25 gift card really about?

Click to play video: 'Is the $25 Loblaw gift card just a PR move?'
Is the $25 Loblaw gift card just a PR move?
WATCH: Is the $25 Loblaw gift card just a clever PR move? – Jan 8, 2018

Loblaw’s card for customers affected by the company’s bread price-fixing arrangement became available Jan. 8.

Consumers can now register on to receive $25 worth of free groceries at a Loblaw store. Anyone who’s reached the age of majority and has purchased one or more of the packaged bread brands listed on the site is eligible. The card can’t be used to purchase alcohol and tobacco or be redeemed for cash, but there are few other restrictions.

And though some lawyers have raised concerns that signing up for the card might affect consumers’ ability to participate in a class action lawsuit against the companies involved in the price-fixing scheme, Loblaw has said several times that this is not the case.

READ MORE: How to get your $25 Loblaw card after company’s bread price-fixing admission

But do Canadians really deserve compensation?

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That is the question raised by Sylvain Charlebois, professor in food distribution and policy and dean of the Faculty of Management at Dalhousie University.

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“Bread is cheaper than it was five years ago,” Charlebois told Global News.

Indeed, the price of rolls and buns is lower today than it was in 2013, according to data from Statistics Canada.

In all likelihood, that’s because grocers have taken to use bread as a “loss leader,” a product sold at a loss to bring traffic to the store.

All evidence suggests the price-fixing squeezed retail margins rather than customers’ wallets, Charlebois said.

WATCH: Watchdog raids grocery offices in price-fixing probe

Click to play video: 'Watchdog raids grocery offices in price-fixing probe'
Watchdog raids grocery offices in price-fixing probe

So why the $25 card?

The discovery that Loblaw and its parent company George Weston participated in an industry-wide bread price-fixing arrangement from late 2001 to March 2015 has likely shaken consumer confidence, which the retailer is now trying to regain, Charlebois said.

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READ MORE: Loblaw alerted competition bureau on bread price-fixing immediately, company says

The $25 card kills two birds with one stone for Loblaw, he added. It serves as an apology to the public, and it brings shoppers into the store who will likely spend more than the face value of the gift card.

“It really is a PR initiative,” said Charlebois.

Loblaw and George Weston revealed last month that they participated in an industry-wide bread price-fixing arrangement from late 2001 to March 2015, but tipped off Canada’s competition watchdog and will receive immunity in the ensuing investigation.

– With a file from the Canadian Press

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