Costco is pushing prices down for traditional retailers.
Don’t worry too much about Metro just yet though as they are holding their own in the market place as they reported an eight percent increase in its net profit to $176.5 million or 72 cents per share compared to $163.5 million or 64 cents per share for the 3rd quarter of last year. Overall Revenue was up 4.5 per cent year-over-year, growing by $173.1 million to just over $4 billion. These new entrants, like Walmart and Costco are considered merchandisers andnot grocery retailers. They canusedifferent pricing programs to attract customers into their warehouses. Walmart has become the leading grocery supplier in the U.S. and many retail experts north of the border feel they will achieve the same status in Canada also, but Metro, Loblaws and Sobeys alone with many others are not going to make it easy for them.
By Jamie Barrie T he CEO of the Metro grocery chain says as the infla- tionary pressure on food subsides the savings will be passed along to customers. Eric La Fleche said food prices continue to fall and that is good news. The decrease is driven by more fresh produce purchased from local sources and the stabilization of foreign exchange rates. It all spells good news for battered customers who have seen a steady increase at the checkouts for months. The Montreal-based company’s internal food inflation index fell to 1.5 percent which is down from 2.8 and 3.0 percent earlier this year. La Fleche explained items such as meat were decreasing making it easier from the organi- zation’s 600 stores across Ontario and Quebec to control costs for their customers. La Fleche said his goal is to “give back to our custom- ers as the market, you know, plays out.” Loblaws is also getting into the game as they seek new agreement with suppliers. Loblaws told suppliers that as of September 4th they will be demanding a 1.45 percent decrease on all incoming shipments and will reject any future price increase unrelated to fuel costs or foreign exchange rates. La Fleche has not indicated if he will go that far, but understands the business reason for this action. The CEO said, “if something is happening in the market, we make sure we get our fair share.” He added, “you can count on us to continue to negotiate fairly and work hard with our suppliers to make sure we have the right consumer offer at the right prices as we’ve always done.” Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University in Halifax, said retailers have been pressured to lower prices and that is something the supply chain must respond to as well. “That is why we’re seeing a lot of distributors asking vendors to reduce their own prices of products,” Charlebois said.
Charlebois also noted competition from Walmart and
39
SEPTEMBER 2016 • SPOTLIGHT ON BUSINESS
Made with FlippingBook - Online magazine maker