The world’s largest digital retailer is grabbing market share from Nunavut’s traditional sales leaders, who say there could be consequences if the trend continues.

Although the long-established North West Company and Arctic Co-operatives Ltd. are enjoying greater returns during the Covid pandemic, they are feeling the pinch from the planeloads of parcels that Nunavummiut are ordering through Amazon.

The towering stacks of Amazon parcels that used to occupy more and more floor space at the post office in Iqaluit are now sent to Amazon’s pick-up hub, which opened in December in the capital city. The global retail giant has been making inroads in Iqaluit for years.
Trevor Wright/NNSL photo

“Every one of those Amazon boxes hinders the ability of the local retailers to survive,” said Duane Wilson, vice-president of stakeholder relations for Arctic Co-operatives.

Ellen Curtis, manager of internal communication with the North West Company, acknowledged that “Amazon places stress on the ongoing investments by community-based retailers like ourselves.”

Amazon, meanwhile, is striving to improve its shipping service to Nunavut’s capital, having announced a partnership with Canadian North in December and opening a pick-up hub for parcels in Iqaluit. The company is aiming to fulfill orders in as few as three days.

Could other Nunavut communities expect such service in the future?

Amazon spokesperson Dave Bauer says, “As far as expansion is concerned, we’ve been servicing Iqaluit for many years. We’re always evaluating areas to expand delivery options, but currently our focus remains on Iqaluit.”

Mayor Kenny Bell said 200,000 Amazon parcels arrived in Iqaluit in 2019. Bauer said that figure is incorrect, but he declined to provide an alternative number.

Whether Amazon enjoys a discounted rate or fixed price through Canada Post also remains a mystery.

“We do not disclose details of contractual agreements with our customers,” stated Canada Post spokesperson Nicole Lecompte.

Christina Tricomi, media relations with Crown-Indigenous Relations and Northern Affairs Canada, confirmed that Amazon is not registered with Nutrition North Canada, a federal government program that lowers shipping rates on grocery orders and other essential household items.

“We understand that for the most part, Amazon’s northern sales currently focus on non-perishable food and non-food items,” said Tricomi.

The products that are in greatest demand in the North is something else Bauer declined to disclose.

Challenges and benefits

Wilson and Curtis say their companies face higher costs by having stores on the ground in the North.

The Co-op has 32 locations in Nunavut and the NWT and those communities have a combined population that wouldn’t support a single Canadian Tire store in the south, according to Wilson.

He said he completely understands why consumers in Nunavut are enticed to buy items at lower prices from Amazon but as that continues to happen, stores in the North may move towards only selling items that Amazon doesn’t, and the cost of those items, such as lettuce, will rise, he reasoned.

Curtis contended that in-person shopping offers advantages that Amazon cannot.

“Many customers prefer to see a product before they buy it and most prefer to have their item(s) immediately,” she stated. “There are staff on hand to answer questions, process returns, etc. We also have the ability to warehouse product, so if transportation is impacted by weather, for example, we have safety stock for the community and this was extremely critical throughout the pandemic.”

In regards to employment, the North West Company supports 925 jobs in Nunavut and the business has spent more than $75 million in building and renovating its facilities in the territory over the past five years, she said.

In addition, there are grants and donations toward local causes. The North West Company was one of the partners behind a $3.6-million grocery voucher and hamper campaign for vulnerable residents across the North during the Covid pandemic, Curtis noted. Sports teams and other groups often approach the company in advance of fundraisers.

“We are proud of the support we provide to community organizations and for community events; year-to-date, store-level spending toward community donations has increased by 73 per cent. Big or small, these contributions are made possible because of our in-community relationships with our customers,” said Curtis.

Wilson pondered what Amazon would be willing to do to assist local causes.

“What would the donation scene look like in Iqaluit if every business decided to say, ‘We’ll happily donate X up to a maximum of this, matching what Amazon gives you?’” he asked.

Covid boost to the bottom line

The North’s retailers have seen sales climb during the pandemic, largely due to far fewer shopping trips in the south for Northerners and federal aid programs putting more money in some consumers’ pockets.

Curtis said the North West Company earns about four cents of profit from every dollar of sales. The remainder, she added, goes towards transportation, rent, utilities, maintenance, services and wages – which were increased for staff during the pandemic.

She also pointed out that the 2018 Government of Nunavut Price Survey showed that the average food basket in the 21 communities served by her company was $170.25 compared to $189.52 in communities without a Northern or NorthMart.

Wilson asserted that there’s “no motivation for a community Co-op to take advantage of a situation as it pertains to pricing because its owners are the same people using the services. It’s not an anonymous shareholder somewhere – it’s their neighbours, it’s their family, it’s their friends.”

Arctic Co-operatives Limited has diversified its businesses in the North – branching out into hotels, cable television services and fuel distribution – to offset down years in the retail business, Wilson added.

‘Sensitive subject’

Chris West, executive director of the Baffin Regional Chamber of Commerce, can see the appeal of Amazon but also the drawbacks it poses.

“It is a sensitive subject as far as shopping local is concerned as we should always encourage people to support the businesses that support them throughout the year,” he said. “Many of our local businesses give back to the communities they serve. While understanding that price difference is a major concern when you talk about Amazon on most items, we would have to focus on items that may not be available in many communities where we have members.”

Fact file
North West Company and Arctic Co-operatives earnings and donations

  • The North West Company is the operator of 118 Northern food and general merchandise stores, seven larger NorthMart stores and numerous Quickstop convenience stores in Northern Canada. The company also runs a variety of other businesses elsewhere in Canada and Alaska.
  • Third quarter 2020 combined sales amounted to $553 million, while gross profit rose by 9.3 per cent.
  • In the second quarter, the company reported overall sales of $648.5 million and net earnings of $62.6 million. The dividend paid to shareholders was raised by three cents per share to 36 cents.
  • Publicly traded on the Toronto Stock Exchange, shares in the North West Company that were valued at $3.17 on Feb. 1, 1995 are worth nearly $32 today.
  • The retailer stated that its donation levels had increased by $2.6 million in response to the Covid-19 pandemic as of the end of the second quarter.
  • In June, the company announced $1 million in support of the health and well-being of youth in Northern Canada through an in-house charity known as the Healthy Horizons Foundation.
  • Arctic Co-operatives Ltd. comprises 32 community-owned Co-op stores across Nunavut and the NWT.
  • The company’s most recently published sales on its website dates back to 2018 when the figure stood at $230 million.
  • Patronage paid back to member Co-ops in 2018 totalled $10.8 million.

Sources: North West Company and Arctic Co-operatives

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13 Comments

  1. Remember back when a 4L milk was $14.28 and size 6 pampers were $97.00 for a box and the stores didn’t care?
    Here is an example of 1 item –> there are 8 people in my house we finish a box of cereal roughly every day, I save $2.00 on each box that I get from amazon rather then getting locally. That’s average of $60.00 savings every month just from 1 item. So yes I’ll continue to order cereal, juice, toilet paper, paper towel from Amazon. (Just these 4 items save me hundreds every month) Even if local raises the price on other things in the long run I still save piles. (and we all know the Northern and Co-op have been taking advantage of the north of for years and years, so screw them. If they are so worried then compete.

  2. Amazon can deliver to my PO a 12 pack of Gingerale for under $6.00 (In Rankin where a 12 pack is $20+), why the heck would I pay the prices locally for this item?
    NEWS FLASH for anyone reading this ***Amazon Prime works in any northern community if you know how to work the system)***
    I’m a consumer – I DON’T CARE about the ownership profits. If Northern was losing money I might be more concerned for jobs, but they already overprice their meat and fresh products. I need these items and since I can’t order them in I am FORCED to get locally, though 99% of the time I go through a company like Arctic Buying so I’m basically not shopping local at all if I can help it.
    The local consumer is disgruntled and they put up with local shopping because we have to, NOT because of options.

  3. Northern and coop are just crooks whining they won’t be able to send our money south. Maybe with Amazon stuff will get Cheaper?(or are the gonna copy redtop and raise prices beyond understanding). Someone should contact the BBB and get them to investigate Northern products and prices. No one wants Northern but we have no choice. They don’t even give employees food discounts BUT to the managers they can get deals and free foods.

  4. THIS SHOWS YOU HOW MUCH NORTHERN IS OVERCHARGING FOR FRIEGHT. YOU CAN GET 10 PRODUCTS FLOWN IN THROUGH AMAZON AND THE SAME THING WOULD COST TRIPLE FROM NORTHERN FOR 1 PRODUCT. NORTHERN IS JUST PLAIN GREEDY. IF YOU CAN AMAZON 3 CASES OF POP FOR THE PRICE OF ONE CASE FROM NORTHERN WHERE ARE YOU GONNA GET YOURS FROM? ONLY GREEDY THAT WORK FOR NORTHERN WILL BITCH AND MOAN. let’s hope amazon damn near shuts Northern down.

  5. Where I’m from i can order 4 cases of Coca-Cola from Amazon for 1 case of the same from the northern now.

  6. .04 c on the dollar profit. What bullcrap. The most rip off artists in Nunavut, besides shatter dealers, and boot leggers. Biggest mark ups. Wife used to work at the only store here. A new T.V. came with a price tag of 350.00. Went on the shelf with a new price tag of 1399.99.

  7. We all compare prices and will go elsewhere to buy them, not everyone can do that, but if I can I will.
    My grandmother who is 88 years old has an account with NWC, they take advantage of those that do not know about interests.
    She likes to buy furniture and other things, and most times she feels like charging them to her account, they charge her 19% interest! I tried to explain to her but she won’t listen to me. So, it is not just about comparing prices of food and others, also there are people that cash their cheques at NWC (their choice to do so) they seem to overcharge for cashing cheques, as well as the income tax season, (I don’t know how much they charge, but I could imagine a lot)

  8. Oh cry me a river. Heaven forbid that the price gouging in the north feels the pinch with a little competition. Instead of complaining, do your home work and figure out ways to bring your prices down. I was look for an incumbent bike, Amazon little over $300, Northmart over $1600. Not really a hard decision when $1300 worth of saving are involved.

  9. Hey DEREK NEARY, lets get an article from the consumers prospective. All the stories about Amazon “invading” the communities and the north is always from the side of the stores and how -boohoo- it’s hurting them and they do SOOOOO much good for the north (donations are a laugh per community, they probably toss more product then they donate regularly). In all of history has anyone ever said “oh the stores here have reasonable prices in the north”? NO never-ever. So GO Amazon GO!!!
    Take those jobs from the local stores and turn them into Amazon depots, turn them into Canada Post jobs. When 1 door shuts another opens.
    Can you tell from the comments that the consumer has no sympathy at all for the local retailers? Their history shows a continued line of abuse and unhappy customers. Customers put up with it because they had to, but now times are changing and the stores can whine all they want but it doesn’t change the fact that we now have options.

  10. Not only are the prices unreasonable, most of the can products, frozen juices and cereals are expired 2017, 2018 yet they are still on the shelf and over priced. Even their junk food is outdated, especially the chocolate bars (lol). Northern and Co-op continue to take advantage of the residents in Nunavut, especially in the outlying hamlets. Ketcup $10.00, frozen can juice 12$, the owners of Northern stores are reaping in the profits and they know it, and the same goes for the Coop. It is unfortunate that this is the trend in Nunavut and the consumers are hurting.

  11. Northern/coop keep raising prices on stuff
    Canned food I use to stock up on use to be a little over $3. Now they are up almost $5.
    Some powdered products use to be $1. I would buy 10 at a time. They are now $3 something.
    Cheese is $15-$20. Online can order better cheeses in more variety for same price.
    Bottled juice is $6-$8. You can order same ones online $1.50-$2.
    Some chocolate bars are almost $4. You can find same online for $1-$2.
    Candies can be anywhere from $5-$12. You can find same online for $1 or less.
    Pampers $50. Online $20-$30.
    Just because coop gives back doesnt mean the profits the make from us stay in our territory. Maybe Northern and Coop should be made to be headquartered in Nunavut?
    Rankin Inlet northern has 4 different stores but they all charge different prices for the same thing.

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