Produce and fresh food will be a big priority for Metro Inc. stores over the next few years, says president Eric La Fleche, while Walmart’s invasion of Quebec has had minimal impact on Metro’s stores so far.
Speaking at the CIBC Retail and Consumer Conference in Toronto Wednesday, La Fleche said efforts to revamp Metro’s produce sections have to date yielded positive results.
La Fleche said produce managers recently told him that customers really like the new layout, rolled out in the past year. While he did not disclose sales specifics, La Fleche said: “The needle has not moved a huge amount but it’s moving in the right direction.”
The new layout includes lower tables, emphasizing a market feel. Stores are also putting out less inventory but more variety and with a greater emphasis on organic. Metro stores have been able to grow sales using this layout without adding too much extra shrink, La Fleche said.
To date, 96 stores in Quebec and 123 stores in Ontario have been updated with the new layout. In Ontario most of the stores changed are Metros and the company is now starting to revamp its discount Food Basics stores. In Quebec, about two-thirds of the conversions have been at the conventional Metro banner; the rest at Super C discount stores.
La Fleche said that before the conversions “we weren’t thrilled with consumer feedback on our produce departments and we set our minds to improving that.”
He added that: “What we did in produce we need to maintain and hopefully will do in other departments in the months and years to come.”
La Fleche said the company’s next big capital investment will be the construction of a new produce distribution centre in Laval. It will replace an aging warehouse inherited in 1992 when Metro purchased Steinberg’s.
La Fleche said that Metro is the top grocery retailer “or close” to it in Quebec and the second largest supermarket player in Ontario. The company has had a return on equity of over 15 per cent in the last five years and increased its square footage by 8.5 per cent in the past five years.
With greater emphasis across the industry on discount, La Fleche noted that the company now has 80 Super C stores in Quebec, up from 55 stores five years ago. The Quebec economy has not performed well lately and more shoppers in that province are willing to go to discount stores.
But La Fleche said Metro has experienced only “modest” impact from Walmart, which launched its grocery-focused Supercentre format in the province a year ago.
There are only six Supercentres in Quebec now but more are on the way. La Fleche said his company has prepared itself for Walmart. “We’ve made good moves to be ready and have a defence plan. We’re ready to compete to meet that challenge head-on.”
La Fleche also said that Metro is committed to growing the Adonis chain (pictured above) that it purchased a 55 per cent stake in last year.
Adonis specializes in Mediterranean food and has five stores in Montreal. La Fleche says more stores will open in Quebec and the concept will be brought to Ontario as well.
Asked by CIBC analyst Perry Caicco how a Mediterranean chain will help Metro’s ethnic strategy in Toronto–where most ethnic consumers are South Asian and Chinese, not Greek–La Fleche said he believes there is a market for Adonis’s assortment, focus on HMR and fresh foods, and strong service element.
As for Asian consumers in Toronto, he said Metro is primarily reaching to them through the Food Basics banner, by adding more ethnic assortment and promoting certain products for ethnic holidays. “But it’s not a Chinese store,” he said.