Online sales surge fuels e-grocery investment at Metro

Metro remains focused on strengthening its omnichannel strategy as demand for grocery delivery and click and collect continues to grow amid the pandemic.

During a call with analysts Wednesday morning, Metro president and CEO Eric La Flèche announced plans to convert a 100,000-sq.-ft industrial space into a dedicated hub that will fulfill online grocery orders for delivery to customers in Montreal.

"This dedicated store will leverage our key learnings and technology investment made over the last four years," said La Flèche. "This store will offer the same variety and freshness offered in our regular Metro stores for next day home delivery with the option for same-day delivery."

News of the accelerated investment in e-commerce followed the release of Metro's fourth-quarter results, which included a 160% increase in online grocery sales. Metro reported $4.14 billion in sales, up from nearly $3.86 billion a year ago, with food same-store sales gaining 10% for the 12-week period that ended Sept. 26.

La Flèche said the building is in need of modifications, which will take approximately $15 million in capital expenditures. "Everything inside needs to be done to build a food store that will be efficient for an e-comm model," said La Flèche. "That’s why we need a few months to build it out and start operations next spring, ramping up to next summer."

To start, the new hub location will use the same technology as Metro's other hubs with the option to add micro fulfillment down the road, said La Flèche. At a Metro hub location, employees hand pick each order and place items in one of three zones–temperate, refrigerated and frozen zone–before they are delivered. Delivery trucks are equipped with the same three zones to ensure freshness.

La Flèche said Metro will eventually build more of these dedicated hub facilities in "large, dense urban centres" including Toronto.

Additionally, Metro will increase the number of stores offering click-and-collect from 40 to more than 100 by the end of fiscal 2021, said La Flèche. And, the grocer will also continue working with Cornershop– the on-demand grocery app that was acquired by Uber last fall-- to "add flexibility to our online capacity," said La Flèche.