The standard of living of Quebec families improves
significantly throughout the 1960s and 1970s. In 1981, however, the
worst recession since the 1930s hits the western world. The crisis
is particularly severe in Quebec, where the recovery fails to take
hold. Unemployment and inflation rise sharply, while interest rates
soar to new heights, exceeding the 20% mark. In Quebec City and
Ottawa, government endeavours, with varying degrees of success, to
create programs that will revive the economy.
The food industry is rapidly transformed by numerous mergers and acquisitions. The opening of new stores, combined with weak demographic growth and the negative impact of the economic crisis, further intensifies competition and limits expansion opportunities. Through it all, Metro-Richelieu's leadership allows it to overcome these difficulties and continue to grow.
The creation of Metro-Richelieu Inc. enables the new group to carve out an enviable position in the food industry. Members' combine sales represent a 15% market share. Confident of the Company's strength, management seeks to enhance the quality of service offered by Metro-Richelieu Inc.
In 1978, a committee is formed to look into various avenues likely to ensure the optimal performance of the Boeuf Mérite plant. The selected expansion project calls for the addition of a delicatessen section, paving the way for the diversification of products offered by this subsidiary. Ten years after its inception, Boeuf Mérite's popularity remains undisputed. Capitalizing on its excellent reputation, the subsidiary's sales top $100 million, for a weekly volume of about 1,800,000 pounds of meat.
Intent on developing new services that will benefit its members, Metro-Richelieu Inc. creates new divisions. Buanderie Mérite is established to standardize the dress code for store employees while exercising greater control over maintenance costs. Another new division, Équipement Mérite, is mandated to develop a group of services for retailers wishing to redesign their premises, or simply replace various pieces of equipment in their stores.
In 1979, Metro-Richelieu Inc. changes its name, becoming Groupe Metro-Richelieu Inc. That same year, it opens an 80,000-square-foot warehouse in Quebec City. These new facilities enable the Company to better meet the needs of its customers in Eastern Quebec. While its banners are already well established in that region, management wants to further accelerate this growth. To this end, it creates a special team responsible for recruiting new members. Having made promising headway in the Quebec City, Saguenay-Lac-Saint-Jean and Lower St. Lawrence regions, the group now boasts a province-wide presence.
In 1980, Groupe Metro-Richelieu Inc. enters the convenience-store market, a fast-growing segment of the food industry, with the introduction of its Dépanneur 7 Jours banner. This move is in response to requests expressed by the owners of many establishments of this type. In the process, the Company further increases its business volume. As a Journal de Montréal columnist points out in an article entitled "Une nouvelle offensive de Metro-Richelieu" (A New Offensive by Metro-Richelieu), the proposed formula is patterned on the one on which the group's success is founded. Those who apply to join the banner continue to manage their own businesses, while benefiting from the group's tremendous buying power. As the reporter notes, their only obligation is to comply with certain regulations concerning store colours, interior layout and products to be sold.
Always at the cutting edge of technology, in 1980, Groupe Metro-Richelieu Inc. also installs optical scanners in selected stores. In addition, the Company completely overhauls its advertising strategies and coins a new slogan "On connaît not'monde" with Gaston L'Heureux as advertising spokesperson. Translating loosely as "We know our customers", the new approach centers on the key to the Metro banner's reputation, namely the quality of the personalized service offered by its stores. The campaign meets with resounding success. Moreover, the various initiatives taken during this period yield outstanding results with members recording combined retail sales in excess of one billion dollars in 1980.
The group's rapid expansion inevitably raises a
number of organizational difficulties as well as a shortage of
space. In response to these problems, the Board of Directors
decides to find a location better suited to the Company's growth
potential. They finally settle on a site in
Rivière-des-Prairies. Groupe Metro-Richelieu Inc. persuades
the City of Montreal to sell it a huge 2,600,000-square-foot lot at
a price of $527,133. In return, the Company promises to erect a
vast distribution centre, to be called Mérite 1. Ultimately,
this project consists of the construction of three
separate structures: a huge warehouse with state-of-the-art
equipment, a maintenance garage
and the Company's head office.
In light of the high interest rates prevailing at the time, and the group's own financial structure, the Company is compelled to turn to its members to finance the project. The latter authorizes the Board of Directors to use advances owed to them, subordinating them to potential creditors. This allows Groupe Metro-Richelieu Inc. to obtain the loans required for the construction of Mérite 1. The work, which carries an estimated price tag of $45 million, starts in October 1981.
In the fall of 1981, Groupe Metro-Richelieu Inc. and
Épiciers-Unis Inc. call a press conference to make an
important announcement: the two companies are merging. While
agreements with Les Épiciers Maisonneuve (1956) and Les
Épiceries Richelieu Limitée (1976) have enabled the
Company to grow at a swift pace, this transaction can safely be
qualified as "a giant stride" in the unification of Quebec grocers.
As a result of this merger, the Company now represents some 900
grocers. Together, they generate retail sales in the order of $1.5
billion. With a 25% share of the Quebec market, the new group
emerges as the largest association of grocers in Canada.
With legal formalities out of the way, Groupe des Épiciers Unis Metro-Richelieu Inc. shifts its attention to the reorganization of the Company's general structures, in an effort to improve services to its members. First, an automated telephone order-taking system is set up. A few months later, a meat cutting and distribution centre is inaugurated in Quebec City. Then in 1983, the entire staff is mobilized for the move to Mérite 1, which becomes one of the first companies to have a daycare centre for its employees' children on the premises.
The Company's former facilities soon have a new purpose. The Notre-Dame Street warehouse now houses Équipement Mérite and Éconogros, a new division responsible for the development of institutional services (supplying hotels, restaurants, institutions and convenience stores). In 1983, the group reorganizes its Quebec City premises and operations, since customers in the Lower St. Lawrence and Gaspé regions are now being served from a new distribution centre in Mont-Joli. In January 1985, the Company achieves an important breakthrough in the Abitibi region with the conclusion of an agreement that calls for Gestion Montemurro Ltée's 41 affiliated retailers to join one of the group's banners (Metro, Richelieu, Ami or Gem).
Despite all these changes, the Company and its
members manage to maintain the same high standards of quality. This
commitment to excellence earns them a number of awards. At the 1984
Mercuriades, Groupe des Épiciers Unis Metro-Richelieu Inc.
wins the Mercure as Tertiary Company of the Year. The performance
of the group's members are also acknowledged at the 1984
Annuelles de l'Alimentation, a yearly event sponsored by the Quebec
Food Retailers Association. In fact, they take home no fewer than
16 awards, including five golds for best grocers in the
convenience, small, medium, large and superstore categories. This
is a first, as no other organization has ever won these
five awards at a single event.
Responding to increasingly fierce competition, the Company revamps its advertising approach, targeting new potential customers. In 1985, Marguerite Blais becomes Metro's new spokesperson, popularizing the slogan "Allô, allô, je fais mon Metro". Guy Richer and Danielle Proulx are chosen to represent Marché Richelieu, Richelieu's new trademark. In addition, management agrees to join forces with the entertainment industry, to organize the first annual Gala MetroStar in 1986. Over the years, this event has become the most popular program honouring Quebec performers. In 1987, it offers its assistance to the Montreal Symphony Orchestra with the popular Matins Symphoniques Metro, a series of low-cost concerts geared especially towards seniors.
In 1985, Groupe des Épiciers Unis
Metro-Richelieu Inc. decides to strengthen its financial structure.
Members unanimously agree to convert their advances into capital
stock. One year later, they approve a Board of Directors proposal
to list the Company, which has now become Metro-Richelieu Inc., on
the Montreal Exchange. An initial public offering is floated
in November 1986 and no fewer than 5,060,000 Class A subordinate
shares rapidly find takers at a price of $6 per share (following
the two stock splits, this equal 20 240 000 Class A Subordinate
Shares at $ 1.50 per share). The influx of capital enables
Metro-Richelieu Inc. to diversify its business and make several
acquisitions in 86 and 87. These include the purchase of McMahon
Distributeur Pharmaceutique Inc., which takes the Company into the
pharmaceutical distribution sector. Other acquisitions result in
improved quality of service. With the purchase of Pêcheries
Atlantiques, the Company obtains facilities allowing the more
efficient supply of fresh fish and seafood. It also acquires La
Ferme Carnaval Inc., which owns 14 Super Carnaval outlets, thereby
achieving a major breakthrough in the discount food-store
segment.
By the end of the decade, Metro-Richelieu Inc. is clearly experiencing accelerated growth. It supplies some 900 grocery stores under its various banners, recording a total of $1.9 billion in sales.
