BUSINESS

Loblaw, Metro Set Sights Online As Profits, Revenues Climb

11/18/2015 05:21 EST | Updated 11/18/2016 05:12 EST
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Two of Canada's largest grocers shed a little more light on their plans to make online shopping convenient, but that doesn't necessarily mean they agree on the strategy.

Both Loblaw and Metro tackled the rising popularity of e-commerce shopping on Wednesday during their quarterly conference calls as the companies delivered stronger overall profits and revenues.

Pressure has been mounting for Canadian grocers to respond to evolving consumer habits that show more people are using their computers and smartphones to shop for lower prices and buy online.

With rare exceptions, grocery stores have been a laggard in this area, partly because for years consumer research showed minimal demand for online grocery options in Canada.

When Walmart and Amazon.ca charged into the largely untouched Canadian online grocery market, the priorities for big chains began to shift.

Loblaw has since rolled out its "click-and-collect" option at 30 stores in some regions of the country, including many parts of Ontario, as well as Edmonton, Vancouver and Kelowna, B.C.

The project lets customers order groceries online and then pick them up at the local store, similar to Walmart's in-store "grab-and-go" lockers.

Shoppers Drug Mart Expansion

Loblaw president Galen Weston said he sees a chance to expand its pickup service beyond grocery stores and into the Shoppers Drug Mart chain, which the company also owns.

"I think it's fair to say those points of convenience in the Shoppers Drug Mart network represent a meaningful opportunity for us," he said.

But Weston isn't as confident that store-to-door delivery is the future of his business at this point.

"Our conviction around click-and-collect is growing," he added.

"The customer response ... suggests this is a superior customer service proposition ... but you know, there will be others with a different view and they can make their investment choices as they see fit."

Metro Rolls Out E-Commerce Project

Next year, fellow grocer Metro Inc. will begin testing its own e-commerce project that could include in-store pickup or delivery. So far, the company has declined to offer any details.

In a call with analysts, Metro's chief executive Eric La Fleche was reluctant to proclaim online shopping as the next step in how consumers buy their food.

"For a portion of the population, e-commerce might be the most convenient way to shop," he said.

"We'll see how big that demand is — and that market is — as it evolves. When the consumer is ready for that, we'll be ready."

"For a portion of the population, e-commerce might be the most convenient way to shop."

On Wednesday, Loblaw and Metro posted higher quarterly results in what both companies characterized as a highly competitive market driven by discounts and promotions.

Loblaw Companies Ltd. (TSX:L) reported earnings rose nearly 17 per cent to $166 million, or 40 cents per share, for the third quarter.

Sales totalled $13.95 billion, up from $13.60 billion. Growth in same-store sales — stores that have been open more than a year — for the company's food business was ahead 3.1 per cent, excluding its gas bar and the negative impact of a change in distribution model by a tobacco supplier.

Meanwhile, the company's drug retail same-store sales growth, which includes Shoppers Drug Mart, was 4.9 per cent. Same-store pharmacy sales increased 3.5 per cent, while front store sales increased 6.2 per cent.

At Metro Inc. (TSX:MRU), earnings rose 14 per cent to $131.7 million or 52 cents per diluted share for what was its fourth quarter.

Sales grew to $2.83 billion from $2.71 billion in the same quarter last year. Same-store sales were up 3.4 per cent.

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