Canadian food and pharmacy retailer Metro Inc. says it is witnessing a significant shift in consumer shopping habits as discount grocery stores continue to outperform their conventional counterparts. This trend, which has been gaining momentum in recent years, is putting increased pressure on traditional store models and forcing retailers to adapt.
Eric La Flèche, CEO of Metro Inc., addressed this challenge during the company’s third quarter earnings call on Wednesday, August 14. He emphasized the need for conventional stores to differentiate themselves and enhance the customer experience. “The experience for the customer has to be elevated,” La Flèche stated, highlighting the company’s strategy for its Metro banner stores.
To combat the growing popularity of discount grocers, Metro says it is investing heavily in its conventional stores and loyalty programs. The company aims to provide a unique offering that sets it apart from discount competitors. This approach is being implemented on a market-by-market and store-by-store basis, tailoring the shopping experience to local consumer preferences.
Metro Inc. operates a diverse portfolio of retail brands across Ontario and Quebec. In addition to its namesake Metro stores, the company owns the Jean Coutu pharmacy chain. On the discount side, Metro operates Super C in Quebec and Food Basics in Ontario. The multi-banner strategy allows the company to cater to various consumer segments and price points.
La Flèche noted that in markets where no conversions between formats have occurred, discount stores are experiencing faster growth than conventional stores. This trend underscores the importance of maintaining a presence in both market segments. “That’s why we like to have both banners, and we go to market with both banners,” he explained.
The company reported higher food same-store sales for its third quarter, primarily driven by its discount banners. However, La Flèche expressed satisfaction with the performance of conventional stores on a relative basis, despite acknowledging the pressure they face in both Quebec and Ontario markets. When combining discount and conventional sales, Metro is seeing gains in market share and sales volume.
Expansion plans are underway for Metro Inc., with six Super C stores already opened this year. The fourth quarter will see the addition of a Food Basics store in Ottawa, a Super C in Montreal, and a Metro location in Ottawa. These openings reflect the company’s commitment to growing its presence in key markets.
La Flèche observed that the discount market is growing more rapidly in Quebec compared to Ontario, partly due to square footage additions and massive conversions by a competitor. He said that he anticipates that once this conversion wave ends, the Metro banner will be well-positioned to resume growth, while the Super C banner will continue to capture growth in the discount sector.
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