Unformatted text preview: expanding private-label program, which yields 25
percent of sales. A national marketing organizationHorizon Internationalmarkets the
program. 3. Metro-Richelieu Inc.
Metro-Richelieu is the second largest food distributor in Quebec. Unlike other grocery chains,
wholesaling accounts for the larger share of its sales volume (66%). There are 294 Metro
supermarkets averaging 15,000 sq. ft, 189 Marche-Richelieu stores, averaging 45,000 sq. ft.,
located in smaller towns and villages, and 36 Super C discount stores with limited choice but
discount prices, averaging 47,300 sq. ft. and located primarily in Montreal. The company
services two independent banner chains with 290 stores, averaging 13,000 sq. ft. and has 65
Metro-Richelieu was struggling until 1990 when the current president and CEO was appointed.
The new CEO sold the nonfood distribution assets (including the Quebec Nordiques hockey
franchise) and refocused the company on food distribution. Tight financial controls and targets
were introduced. Stores were remodeled and overall appearance improved. The result has been
growth in the Quebec market from 25 percent to 34 percent, fractionally below market-leader
Provigo. Although Quebec stores, on average, are smaller than Canadian stores (20,500 sq. ft. vs.
27,500 sq. ft.), Quebec store sales per square foot are 15 percent higher than Canadian stores
because neither Provigo nor Metro is motivated to start a price war. Private-label brands have
been only recently introduced. Flush with cash, Metro-Richelieu has opened a Metro in Toronto
and is looking to expand outside Quebec. In August 1998, the company reported an increase in
earnings compared to the corresponding period in the prior year. 4. Provigo
Provigo has 35 percent of the Quebec market and intends to double its current 10 percent share of
the Toronto market in five years using the Maxi & Co. banner. Pierre Mignault, president and
CEO, joined the company in 1993 from Price Costco Canada. Considerable investment in
technology has improved productivity, reduced costs, and improved service to customers by
speeding delivery of fresh produce. Stores continue to be remodeled and refurbished, and by the
end of 1999, 40 percent of Provigo stores will be upgraded. Mignault believes Provigo is
competitive on price with Wal-Mart and Zellers.
Provigo operates under three banners. Provigo and Loeb are neighborhood convenience stores
with emphasis on fresh and ready-to-eat foods. About 50 percent of these stores are allocated to
fresh products rather than the industry norm of 30 percent. Maxi stores, approximately 80,000 sq. 11 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o ft, are supermarkets combined with 30,000 sq. ft. of general merchandise. These stores are
intended to be the lowest price stores in their market and carry fresh products but no in-store
butchers or bakeries. Provigo is expanding the number of Maxis. Maxi & Co. stores offer a
broader range of items than...
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