Modern-day monopoly? North West Company responds

Last week, CBC Manitoba published this opinion piece by Winnipeg writer Don Marks about The North West Company, which has stores across Canada's North. The following is a rebuttal to that piece by Derek Reimer, the company's director of business development.

The North West Company is a proud supplier of goods and services to 126 communities in northern Canada. We employ more than 3,100 people at our stores in the north, we are the largest employer of Inuit and First Nations people in Canada, and we have an annual payroll at these stores that exceeds $65 million.

In addition, we provide northern residents access to products and services that would otherwise be more costly,
inconsistently available locally, or only available from southern retailers.

Over the next three years, North West plans to invest more than $150 million in the northern communities we serve, making us one of the largest private investors in the region over this period. As such, we would like to respond to the opinion article by Don Marks posted on the CBC Manitoba website on Dec. 11, 2014.

• OPINION | A modern-day monopoly on northern people

While we recognize Mr. Mark’s article was merely his own opinion, we would nevertheless like to address some of its main themes:

Competition: North West faces competition from local retailers and regional chains of varying size, as well as southern retailers. For example, in Nunavut we are in direct competition with the Arctic Co-op in 20 of the 21 communities where we operate. We also compete against the growing presence of online and southern retailers that sell into the north but do not invest or employ locally.

Financial products: There is limited access to banks in many of the communities we serve. Our financial services card products have a number of benefits:

• They are used by a small number of First Nations communities to deliver payroll and/or income assistance. These communities and regional employers find they reduce time and labour costs associated with issuing cheques and vouchers, thus saving them money.
• For our prepaid Visa card, fees are on the low side of industry standards. They can be used to make purchases anywhere, including online. There is no sign-up fee and cardholders pay lower monthly and point of service fees than are charged by many of our competitors. This card is not a credit card as it is prepaid and does not charge interest.
• Our Benefits card that is used for purchases in our stores carries no fees whatsoever.

Profit: North West does not derive its revenues and profits only from Canada’s North. In fact, we have one of the largest international presences of any Canadian-based retailer, with stores in the South Pacific, the Caribbean and Alaska. We also operate Giant Tiger stores in Western Canada. As such, Mr. Marks’ reference to our total sales and income in connection with our Northern Canada business is improper and inaccurate in context.

North West earns 4.2 cents of profit on every dollar of sales ($65 million total profit, not $80 million as reported by Mr. Marks) on an investment base that is considerably higher than the South, because of the high cost of doing business in remote areas. Our net return on investment is comparable to many other retailers and does not reflect anything close to “monopoly” profit levels as suggested by Mr. Marks.

It is helpful to keep in mind that as a community store business, our profit is earned after we pay salaries and benefits for more than 5,500 store staff across all of our Canadian and international operations; after renting land and buildings, including more than 40 store partnerships with local development corporations; after hiring local contractors and paying for construction and repairs on buildings; and after paying local product suppliers, utilities, transportation companies and repair and maintenance businesses.

North West is committed to staying invested where we operate and to serve these communities as a good corporate citizen. Our investment in the North, our local employment, and our participation in community activities is an important point of difference between North West and southern and online retailers.