CEO Eric La Flèche reiterated steps Metro Inc. is taking to absorb rising labour costs stemming from recent minimum wage hikes, at a press conference Jan. 30 following the company’s annual general meeting.
Metro’s strategy to absorb the additional $45 million to $50 million in annual salary costs, has focused primarily on productivity enhancing measures. These include accelerating the implementation of automated cashes in Ontario. According to La Flèche, the company is also testing electronic pricing on shelves, a process being accelerated by falling hardware prices.
READ: Metro’s first quarter sales and profits top analysts’ expectations
La Flèche admitted that labour saving measures, including cutting store hours, are being evaluated on a market-by-market basis. Some locations that had previously been open 24 hours a day, for instance, may now close at 11 p.m.
La Flèche also refuted claims that Metro was involved in the alleged bread price-fixing scheme. He said an internal investigation found no evidence to suggest Metro personnel had done anything wrong.
Investments in efficiencies and store networks
Metro’s fiscal 2017 was marked by "good results" said La Flèche, including the renovation of 45 stores and the addition of 10 outlets to the network. That progress continued during the initial months of fiscal 2018, with another $60 million invested in its store network and the opening of another two outlets.
Productivity enhancements such as a projected $400-million investment in two new Toronto distribution centres (for fresh and frozen foods) will continue and client satisfaction has increased, La Flèche said. Metro is also continuing to experiment with small targeted opportunities. For example, the company is currently setting up a small seafood processing facility to supply Metro stores.
Jean Coutu deal projected to close in coming months
La Flèche also provided an update on efforts to acquire Quebec pharma giant Jean Coutu, which Metro is financing in part through its recent sale of its Couche-Tard holdings. The deal is expected to close during the coming months, after which, Jean Coutu shareholders will nominate two directors to the Metro board. Metro expects synergies from the combination to include the merger of its McMahon Distributeur Pharmaceutique pharma assets with Jean Coutu’s distribution arm, a process that could start as early as this year.
E-commerce is small but growing
Metro’s e-commerce strategy continues to inch along. According to La Flèche, 60% of Quebecers now live in areas where they can purchase Metro products online. These are serviced directly from seven Metro stores that offer the click and collect option. Metro’s CEO declined to provide details about when a dedicated e-commerce distribution centre might be needed, stressing that the business line was growing nicely but that it remained small. Metro is also paying special attention to Whole Foods operations in Ontario in the wake of its acquisition by Amazon. “It’s is on our radar,” La Flèche said. “We monitor it closely.”