What Canadians need to know about Black Friday trends, sales and gift ideas this year

Kristina Elkhazin, head of retail at Google Canada, speaks with Larysa Harapyn about Black Friday sales trends, and what gift ideas Canadians are searching for this holiday season.

Metro plans to scale back store hours, extend e-commerce service in Ontario

TORONTO — Metro Inc.’s customers have shown a clear preference for home delivery of online goods, the grocery company’s chief executive said Wednesday, confirming plans to extend its e-commerce service into Ontario at the end of this fiscal year or in early fiscal 2019.

The news comes as industry players grapple with increased costs due to a minimum wage hike in Ontario passed in the province’s legislature today, and stiff competition in the market thanks to expansion from Costco, and Amazon’s push into stores with its August purchase of Whole Foods. While most grocery players in Canada had been noncommittal about the prospect of delivering fresh groceries prior to Amazon’s announcement, the Whole Foods deal appeared to galvanize the Canadian players’ digital strategies.

Rival Loblaw had long said it preferred a “click and collect” e-commerce model for picking up online grocery orders outside of its stores, but last week the company announced a partnership with Instacart that will allow Toronto customers to receive home delivery of groceries starting on Dec. 6. Walmart, which began grocery delivery in some areas of Toronto last spring, is expanding its service to the adjacent suburbs next month.

“(Home) delivery economics are challenging, but we are making progress,” Metro chief executive Eric Le Fleche told analysts on a Wednesday conference call to discuss fourth-quarter results, which saw higher earnings and a slight rise in same-store sales.

Metro, with stores in Quebec and Ontario, now offers click and collect at seven of its stores in Quebec, as well as home grocery delivery in Montreal, Gatineau and Quebec City, covering 60 per cent of the province’s population. There is “clearly a customer preference for home delivery,” said the CEO.

Metro has said it expects to incur $45-$50 million in extra costs in 2018 from the minimum wage hike in Ontario, and in response La Fleche said the company hopes to improve productivity and will scale back hours at some stores.

“Some 24-hour stores will no longer be 24-hour stores,” he said. “We have to manage the hours the best we can without reducing customer service.”

The minimum wage is set to rise to $14 an hour on Jan. 1 from its current level of $11.60, with the increase to $15 coming in 2019.

In the meantime, Metro has felt the pain of Costco’s expansion. The popular warehouse club is on course to open seven stores in Canada in 2017.

“There is a big club format that has added a lot of square feet in the last 18 months,” La Fleche said. “That has an impact on the whole market.”

Over a million square feet of grocery space was added to the market in the last year, La Fleche said. “To say that has no impact would be lying. It creates competition, it creates a heavily promotional environment and it has an impact.”

Metro added to its market clout with the $4.5-billion friendly takeover of pharmacy chain Jean Coutu Group announced last month. The combined retailer will have $16 billion in annual revenue and a network of over 1,300 stores in Quebec, Ontario and New Brunswick.

In the fourth quarter ended Sept. 30, Metro earned $154.9 million, or 66 cents per share, compared with profit of $145 million (60 cents) in the same period a year ago. That beat analyst mean estimates by a penny.

Shares fell 34 cents to $41.21 in midday trading Wednesday.

Sales were $3.23 billion, up from $2.93 billion. Same-store sales, a key measure of industry performance that strips out the effects of added square footage, rose 0.4 per cent. Last week Loblaw reported same-store sales growth of 1.4 per cent, excluding gasoline.

Financial Post

hshaw@nationalpost.com
Twitter.com/HollieKShaw

Forget Black Friday, hello Cyber Monday: Most Canadians plan to do holiday shopping online this year

A new survey suggests more Canadians are planning to do some or all of their holiday shopping online this year.

A survey commissioned by FedEx Canada and released today found that 65 per cent of Canadians polled planned to shop online this year, while 55 per cent said they did so last year.

Six per cent of those polled said they planned to shop online this holiday season for the first time.

Participants in Ontario, Atlantic Canada and British Columbia were the most likely to shop online for the holidays, with 68 per cent of Ontario respondents and 67 per cent of the others saying they planned to avoid brick-and-mortar stores.

Saskatchewan, Quebec and Alberta had the lowest percentage of respondents who said they intend to shop online, ranging from 58 to 62 per cent.

The survey was conducted online from Oct. 5 to 7 and involved roughly 1,490 adult Canadians. The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population

HBC says Competition Bureau’s mattress pricing probe has cost it US$425,000

OTTAWA — Hudson’s Bay Co. says it has spent more than US$425,000 to date to comply with demands for documents from Canada’s competition watchdog as it investigates alleged deceptive pricing practices.

The retailer says in a filing with the Competition Tribunal that it has invested more than 6,500 person-hours to produce 37,000 documents in response to the Competition Bureau’s complaint made last February.

In the filing, HBC says a recent request for more documents is unreasonable because they would be dated after the latest alleged offense mentioned in the original complaint.

The bureau claims that HBC offered mattresses and foundations sold together at grossly inflated regular prices so that it could then claim deep discounts on the sleep sets to suggest significant deals for customers.

It accuses the company of engaging in that practice throughout Canada between March 2013 and January 2015 and is seeking an administrative monetary penalty and costs of the proceeding, along with assurances the practices will stop.

HBC denied its pricing practices were deceptive in a filing of defence in April.

Grocer Metro Inc. reports higher profit and sales

MONTREAL — Metro Inc. says it earned $154.9 million in its fourth quarter up from $145.0 million a year ago.

The grocer (TSX:MRU) says the profit amounted to 66 cents per diluted share for the quarter which included an extra week compared with the fourth quarter last year when it earned 60 cents per diluted share.

Sales totalled $3.23 billion, up from $2.93 billion, while same store sales gained 0.4 per cent.

Excluding the extra week and $2.5 million before taxes related to its acquisition of Quebec-based pharmacy chain Jean Coutu Group Inc. and the modernization of its distribution network in Toronto, Metro says its earnings would have been similar to last year, while diluted net earnings per share would have been up 1.7 per cent.

Metro announced a friendly deal last month to acquire Jean Coutu Group in a $4.5-billion takeover offer.

The combined company will have more than 1,300 stores in Quebec, Ontario and New Brunswick and about $16 billion in annual revenues.

Ikea Canada eyes mattress, appliance space as Sears Canada departs

TORONTO — Industry fears about the future of store-based retail might be assuaged by the scene outside Ikea’s store opening in Nova Scotia in September.

Crowds began lining up outside the Dartmouth Crossing location at 4 p.m. on the day before the Swedish furniture giant debuted its first store in Atlantic Canada.

“It was just incredible — I’ve never before seen a response like that,” said Ikea Canada President Marsha Smith, who began running the Canadian unit in February after leading its expansion in Ireland. “We had over 4,000 people there at the opening, which is quite a number. The (sales) numbers so far are well above expectations for the store.”

Ikea, with 13 large stores across the country, announced a bullish expansion plan in 2015 that banks on a strong future for bricks and mortar, and plans to have 24 locations across the country by 2025. In addition to its stores, Ikea has six small locations where consumers can pick up online orders and has announced pending store openings in Quebec City and London, Ont.

While the demise of Sears Canada has exacerbated concerns about the direction of retail, Ikea stands to benefit after the department store chain’s liquidation sales end in January.

Despite its failing financial performance for more than a decade, Sears Canada’s exit is good news for retailers who sell home furnishings, mattresses and appliances.

“Sears Canada was strongest in white goods such as appliances and at one time their market share was 40 per cent,” said Carl Boutet, a retail strategist with the Montreal-based advisory firm StudioRX. While Ikea’s appliance line of dishwashers, microwaves, refrigerators and ranges bear typically quirky Ikea product names such as Nutid, Betrodd and Frostig, they are manufactured and have their warranties with Whirlpool.

“We see that as being a huge growth area,” said Smith, who notes Ikea sells an average of 17 kitchens per day in Canada, offering everything from cabinets to kitchen sinks and major appliances.

“Customers see how seamlessly the appliances integrate with our kitchens, and we have a strong focus on energy-efficient appliances. I think that is something you will see more and more of.”

In addition, Ikea began selling a broader range of mattresses a decade ago, and now has a six per cent share of the market in Canada — a figure that stands to grow with the exit of Sears.

“Mattresses are a really important part of the business now, and we have seen really good growth there,” Smith added.

Ikea Canada President Marsha Smith.

On Tuesday, the retailer announced total sales of $2.17 billion in Canada for the fiscal year ending Aug. 31, up 5.9 per cent from 2016.

Though online sales now account for nine per cent of the business, traffic in Ikea’s stores remained steady and the retailer’s overall sales have surged 33.5 per cent in the last three years.

“The biggest trend that Ikea is bucking is that they have doubled down on their physical locations,” Boutet said.

“(The industry) is talking about the death of big-box stores, and here Ikea is building these 600,000 square foot stores. When everybody is downsizing, they are aggressively pushing on the physical. They understand the instant gratification possibility that these large retail formats have with consumers.”

Financial Post

hshaw@nationalpost.com

Twitter.com/HollieKShaw

Competition Bureau drops civil probe of Loblaw over anti-competitive actions

TORONTO — The Competition Bureau has completed an investigation into Loblaw and says it has concluded that no further action is warranted under the civil provisions of the Competition Act.

It investigated allegations that Loblaw had influenced its suppliers’ dealings with other customers by seeking compensation when other retailers sold their products at lower prices.

The agency says it concluded there wasn’t sufficient evidence to support allegations that Loblaw abused its dominant position in dealing with its suppliers.

However, the bureau adds that it could revisit its decision if further information comes to its attention.

The discontinued investigation is separate from an ongoing criminal investigation into allegations of anti-competitive conduct in the grocery industry.

Wal-Mart’s web push includes turning its CEO into a yoga-mat salesman

If you’re in the market for a yoga mat this holiday season, Marc Lore has a deal for you.

The Wal-Mart Stores Inc. executive, who runs the chain’s U.S. online business, is taking on a second job as a salesman for the mats on Walmart.com. And its U.S. chief technology officer, Jeremy King, meanwhile, is working on pitching ab-toning machines. And the e-commerce unit’s chief revenue officer, Scott Hilton, is overseeing exercise balls.

They’ve been locked in a 90-day contest since Oct. 5 to see who can improve the performance of their assigned product category. The idea is to throw the executives into the trenches during the holiday season, giving them a better sense of how they can challenge Amazon.com Inc. in the cutthroat world of e-commerce. They’ve been working alongside the regular category specialists, helping to make the staff more efficient in their roles.

“It’s fun, but it also gets us to understand a day in the life of merchants,” King says.

The contest comes amid a recruitment drive at Wal-Mart’s online business, which has been revitalized since the company acquired Lore’s startup Jet.com last year. E-commerce sales have grown by at least 60 per cent in recent quarters, helping the retailer chip away at Amazon’s dominance.

Archimedes Stuk, a senior director of retail analytics at Wal-Mart, will determine the winner of the contest — based on such measures as sales, assortment and overall customer experience.

What will the victor get?

“Respect,” King says.