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Metro moves forward as consolidation continues

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Retail trends that have taken hold during the pandemic are expected to continue to evolve well into 2022.

Almost a quarter of Canadians (22.2 percent) intend to continue buying online regularly, according to the Dalhousie University survey.

But brick-and-mortar stores aren’t going away even as retailers up their omnichannel strategies.

Metro Inc. BB #:116082 has continued to open new stores throughout the pandemic and renovate others, increasing its network by 1.3 percent during fiscal year 2021.

Costco, which has a deeper penetration per capita in Canada than in the United States, continues to expand, with plans to open two stores this year in Ontario.

“Costco will expand if demographics warrant it,” says Sylvain Charlebois, senior director of Agri-Food Analytics Lab at Dalhousie University in Halifax, NS, noting the company went online “without a lot of bells and whistles—it’s a very simple model and it works.”

Charlebois further observes that Costco has been increasing services for businesses. Last year, Costco opened three stand-alone Business Centres, bringing the total in Canada to five.

Another is expected to open in Montreal this spring. While the stores include a huge array of fruits and vegetables and other fresh items, about 70 percent of the product offerings cater to the needs of all-sized businesses.

Costco and Walmart together with the Big Three comprise more than 75 percent of the Canadian grocery market, with about 6,800 independent groceries and 27,000 small and independent convenience stores making up the remainder.

Research shows independent retailers are gaining popularity, suggesting major food retailers may have less influence on consumers.

Nevertheless, the giants of the Canadian grocery landscape continue to buy their rivals, as seen by the acquisition of Longo’s by Empire Company Limited, Sobeys’ parent.

Carol Spieckerman, president of Spieckerman Retail in Bentonville, AR, says the trend will continue: “M&A activity is not going to slow down,” she says. “Regional players with particular strengths become acquisition targets; others that are weak but have brand name and loyalty also can become targets.”

As to what’s next for Metro, the company has not announced any plans for future acquisitions within or outside its grocery and pharmacy sectors—though it’s not outside the realm of possibility.

François Thibault, Metro’s executive vice president, CFO, and treasurer, discussed the subject during a November analyst call, noting the company not only has a “strong balance sheet that can seize any opportunity” but would be “able to act quickly should there be an opportunity.”

Stay tuned.

This is an excerpt from the Canada Supplement to the March/April 2022 issue of Produce Blueprints Magazine. Click here to read the whole supplement.