Discount Format Gains Traction, but Metro Has Catch-Up To Do in Private Label and Loyalty Programs

As the smallest of the three pure-play grocery chains in Canada, Metro has done a commendable job fending off competition in its core Ontario and Quebec markets with prudent merchandising strategies and strong store operations. However, similar to larger peer no-moat Loblaw, we think ferocious price competition in the commoditized grocery market has prevented Metro from amassing any intangible assets or cost advantage to warrant an economic moat rating.