Yahoo Finance Metro CEO says Canadian industry 'very competitive' as Ottawa eyes foreign grocers
Metro Inc. (MRU.TO) chief executive Eric La Flèche says the Canadian grocery retail industry is "very competitive", as the federal government tries to lure foreign grocers to set up shop in Canada.
La Flèche said on a conference call with analysts on Wednesday following the release of quarterly results that "any affirmation that our industry is not competitive, we disagree with that completely."
"We compete with large global players. We have strong regional and national competitors. We have strong local independents. We have discount, dollar stores, you name it. Amazon, Walmart, Costco. This is an extremely competitive market," he said in response to a question about the federal government looking to entice foreign grocers to try to foster more competition in Canada.
"We'll see if anybody wants to come. It's an open market, and if someone wants to come in, they will do what they have to. But it's a very competitive market."
Last year, the Competition Bureau published a retail grocery market study and concluded that Canada's grocery sector was concentrated and in need of more competition. Industry Minister François-Philippe Champagne has since been reaching out to international grocers in recent months in the hopes that they will set up shop in Canada and spur more competition.
The Wall Street Journal reported last week that Champagne is weighing a list of dozen foreign grocery companies to lure to the country, including Germany's Aldi and Lidl. The federal government also said in its 2024 budget that it "has already strengthened competition to make it easier for more grocers to set up shop and compete to bring down prices for Canadians, and will keep working to do this."
Canadian grocery retailers have faced public pressure and scrutiny over soaring food prices. Food inflation has moderated in recent months, with Metro's internal measure of inflation falling to three per cent, down from four per cent and 5.5 per cent in the previous two quarters. That is in line with the most recent data from Statistics Canada, which showed grocery prices increased three per cent annually in March.
Still, while price growth has slowed, Canadians continue to face cost-of-living pressures and are turning to discount stores and brands, as well as opting for cheaper products.
"While food inflation is stabilizing, overall the economic context is putting lots of pressure on Canadian consumers, so consumers are continuing to trade down in some categories, meat in particular," Marc Giroux, Metro's chief operating officer for food, said on the conference call. He also noted that customers continue to purchase private label items, which are cheaper than national brands. Private label sales growth is now double the national brand growth, he says.
"We're well positioned with our commercial strategy and our store network to capture customer demand."
Metro's net earnings in the second quarter fell to $187.1 million, or 83 cents per diluted share, from $218.8 million, or 93 cents per diluted share last year. The company previously forecast 2024 to be "a transition year" and that its net earnings would be flat this fiscal year as it makes major investments in its supply chain.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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