Five grocery brands in Metro Inc.’s Ontario stable will be consolidated under the Metro banner, the company announced today.
All Dominion, A&P, Loeb, The Barn and Ultra outlets will be rebranded as Metro stores by the end of 2009. Dominion’s Toronto locations are first up, and will undergo the name change next month. By the end of the year, all Dominion, Ultra and The Barn stores will adopt the Metro name, with Loeb and A&P to follow in 2009. Metro’s other grocery chain, Food Basics, will retain its own banner and represent the parent company in the discount food category.
By the time the rebranding is complete, 158 stores will operate under the consolidated banner, making Metro the province’s largest grocery chain. The company also operates 218 Metro-branded stores in Quebec.
The long-awaited change in Ontario comes as the grocery segment is in the midst of intense competition, which has driven down profits as chains have been forced to lower prices.
Besides pressure from the two biggest national grocers, Loblaws and Sobey’s, Metro faces challenges from U.S.-based department store operator Wal-Mart and Toronto-based Shoppers Drug Mart, both of which have increased their grocery sales.
Serge Boulanger, vice-president of marketing for Metro Inc., said the move allows the company to conduct its operations and marketing more efficiently.
“The main offering will be the same in every store, and on the marketing side it will be easier to build brand equity with one brand instead of five,” he said.
Boulanger acknowledged the risk in phasing out several well-established grocery brands, but said research conducted in 2006 suggested that consumers would accept the change.
“We had a lot of discussion about that, because Dominion and A&P especially are very well-known brands,” he said. “But we did our homework.”
Alan Middleton, assistant professor of marketing at York University in Toronto, said Metro’s consolidation is long overdue.
“There’s a short-term danger that a name change will get people to reevaluate their buying habits, but the cost to the system of maintaining multiple banners is ludicrously high,” said Middleton, adding that a shrewd marketing program should overcome any fallout from the elimination of recognizable brands like Dominion.
Metro plans to invest $200 million to support the rebranding effort, which has been on the company’s agenda since it purchased A&P Canada in 2005. Boulanger said roughly $25 million is earmarked for marketing and related expenditures. He added that the investment also includes an upgrade to Metro’s product offering, including more organic products on store shelves.
According to Boulanger, the consolidation will not result in any layoffs.
“I need my people on the marketing side to launch the brand,” he said. “This is the chance of a lifetime. It’s not something that happens every year.”
Cossette, which handled the creative and media assignments for Metro’s brands in both Ontario and Quebec, will continue to serve both roles for the consolidated chain and will launch a new multi-channel rebranding campaign in late September.
