With the rollout of the COVID-19 vaccine and the easing of restrictions in both Quebec and Ontario, Metro saw a slight shift back to pre-pandemic behaviour shopping during its third quarter, while e-commerce sales remained strong—for now.
During a conference call with analysts Wednesday morning, Metro president and CEO Eric La Flèche said basket size was down as customers increased their store visits—a reversal of the less-frequent in-store shopping trend that persisted throughout the pandemic.
“Consumers are shopping around a little more with the easing of restrictions, we’re seeing that in the number of visits, we’re seeing that in the lower basket year over year,” said La Flèche. “Traffic is not back to where it was two years ago and the basket is higher than where it was two years ago, but we’re seeing a shift for sure.”
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Metro also saw a “general uptick” in traffic and sales at its discount stores (Food Basics, Super C) in the quarter, a trend that Loblaw and Empire also noted during their most recent earnings calls. “We’re seeing a gradual shift to more normal pre-pandemic behaviour,” said La Flèche. “The discount channel, in general, is benefiting from that versus conventional, which had a big uplift during the pandemic.”
In all, Metro reported food same-store sales were down 3.6% year over year, but up 11.4% when compared to pre-COVID 2019 levels. (La Flèche said evaluating this year's performance against pre-pandemic levels was more indicative of the company’s underlying performance.)
Food basket inflation was approximately 1% in the third quarter compared to 3% in 2020, driven by produce deflation and aggressive market conditions, said La Flèche.
Food prices will likely remain soft heading into the fall, he said, given increased transportation and labour costs. But Metro intends “to remain competitive, it’s a competitive market out there.”
Though the return of pre-COVID in-store shopping habits is underway, Metro’s online food sales grew 19% year over year (and grew more than five times compared with 2019) as the grocer increased capacity to meet growing demand.
In the third quarter, for instance, Metro opened a store in Montreal dedicated to online orders—replacing three hub stores previously filling orders. This has opened up more delivery time-slots and improved operating efficiencies, said La Flèche. Metro also expanded its click-and-collect offering as well as its partnership with delivery service Cornershop.
La Flèche, however, said he expected online sales growth to slow as the country emerges from COVID and financial results are stacked up against the peak of the pandemic.
“Sales remain elevated versus pre-pandemic so we clearly skipped a few years of e-com growth, but you can expect that e-com sales should come down a bit. That said I think we’re very confident in our model … I think we’re well positioned to capture the demand that’s out there.”