The boss of Metro is exasperated to explain the causes of the rise in food prices. But Quebecers will still have to pay more for food in 2024, recognizes the man who earned $6.1 million last year.
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“I think we have been very transparent, I don’t know what more to say,” said Eric La Flèche on Tuesday in front of around fifteen journalists at Metro’s annual shareholders’ meeting.
Popular discontent with grocers is no stranger to this larger than usual pack.
“People have seen increases for two years! We understand. But we don’t line our pockets. Our margins have not increased, they even fell in the first quarter,” said the boss of the chain of 200 stores in Quebec (106 Super C, 91 Metro).
The profits of the Quebec giant in the grocery and pharmacy sector are down slightly to $229 million in the first quarter, the results of which were also published on Tuesday.
Metro also continues to benefit from inflation: the value of its sales increased by 6.5% to reach $5 billion in food and merchandise during the months of October, November and December.
Grocery store inflation in Quebec and Canada in 2023 (in %)
Source: Statistics Canada
The discount war
Strong “headwinds” are expected in 2024. The manager of the chain was not very reassuring for consumers on Tuesday.
Metro has just spent $500 million to build a state-of-the-art mega distribution center in Terrebonne. The new toy, in operation for two months, will require adjustments and adaptations which will be expensive.
The war between discount brands – a rapidly growing segment – will also continue. Loblaw has already transformed 36 Provigo stores into Maxi in Quebec and will convert 20 more in 2024, while Metro adopts a less ambitious strategy.
“It is certain that if a competitor converts 40 or 50 stores, the discount market is bound to grow,” offered Mr. La Flèche on Tuesday.
Super C is not a weak brand, however, he was quick to add: “The experience at Super C is simple, efficient and honest. People meet there. It’s clean, there are goods, the products are fresh.”
Soon another big bite for Metro?
The presence in Quebec of the American giants Walmart, Costco and Amazon, which play in its flowerbeds, seems to irritate the boss of Metro, who did not stop repeating, Tuesday, that “competition is strong” in the sector of the grocery store.
He does not want to see other foreign players arrive in Quebec in 2024.
Metro is not closed to acquisitions, even if the year promises to be difficult and the boss does not have a “particular target”. Mr. La Flèche said he would “stay tuned” when asked to comment on the rumor surrounding the sale of Ontario’s Rexall’s 400 pharmacies.
As for recent criticism from the federal Minister of Industry, who accuses him of not collaborating with Ottawa, Eric La Flèche remains impassive. Metro collaborated with the Competition Bureau in its study carried out in 2023 and considers it to have been “very transparent”.
The Quebec grocer is only certain of one thing: groceries will cost Quebecers even more in 2024.