Montreal's Metro Inc. plans to spend $200 million to switch the names of a number of popular Ontario grocery chains over to its flagship Metro brand, the company said Thursday.
That means that by the end of 2009, well-known supermarket labels, such as A&P and Dominion, will likely cease to exist, although the outlets themselves will continue to operate.
"We will convert our five conventional banners over a 15-month period to the Metro name. Following this conversion, the Metro banner will be a 376-store-strong national network that will contribute to the company's future growth," Eric La Flèche, Metro's president and chief executive officer, said in a statement.
The move, announced as the company released its third-quarter financial results, is designed to build the Metro name as the firm fights for market share in Canada's fierce supermarket wars.
Consumers confused, experts say
With too many brands slapped on too many stores, shoppers get confused as to which companies run which outlets, retail experts said.
In Metro's case, consumer befuddlement means the company is missing out on an opportunity to build a brand name across Canada, the company said.
The company's major brand, Supermarket Metro, is popular in Quebec but unknown outside the province. Metro wants to create a Canada-wide identity and gain the cachet already enjoyed by archrivals Loblaws and Wal-Mart.
Grocery consumers tend to go to stores with the same name as long as they are conveniently located, retail experts argued.
Metro owns more than 200 grocery stores in Quebec and another 274 in other parts of Canada.
Superstores popular out West
In recent months, Loblaw Companies Inc. has expanded its well-known Real Canadian Superstores, a format especially popular in Western Canada.
As well, Nova Scotia's Sobeys Inc. has begun changing over some of its IGA stores to the Sobeys banner.
Wal-Mart has announced it will be opening or expanding as many as 27 new 215,000-square-foot superstores by next January. These stores, the latest of which opened in Surrey, B.C., in July, will carry fresh produce and meats along with other grocery items.
Metro made its announcement as the company posted earnings a nickel higher in the May to June period this year compared to the same three months last year.
Also Thursday, Metro said it earned $92.6 million, or 82 cents a share, in the most recent quarter, up almost four per cent, compared to a profit of $89.3 million, or 77 cents a share, for the third quarter of 2007.
The company posted sales of $3.4 billion in the period, an increase of less than one per cent compared to revenue for the third quarter of 2007.
Shares in Metro closed the day at $26.60, up $1.16.