A focus on operations
Blurb: Alain Brisebois has lit a fire underneath the CCGD, UGI and --oh yeah,-- he's also a key player in Metro's battle to defend its Quebec turf against incursions by Loblaws and Sobeys.

Alain Brisebois breezed into the Pointe-Aux-Trembles Metro Plus store, smiled at several employees and pulled aside Bernard Lemay, --the franchisee,-- to ask about opening week sales.

"He's amazing," Brisebois, Metro's senior vice-president, (wholesale operations) said later of Lemay, who had just invested $8 million into the outlet. "The guy already owns two stores, and he has the energy to open another. It's franchise owners like him, who get in every morning at 7:00 and work hard all day, who are in large part responsible for our company's success."

It's also guys like Brisebois. Experts say that a business's key managers are those whose departments are most under fire. With Metro, which is under siege from a slew of out-of-province competitors, that focus is on productivity.

Metro's challenge has been the same for several years: how to build on its base, which seems to have hit a plateau of about 26 percent share of Quebec's grocery market, while managing the onslaught from Loblaws, Sobeys and indirect players such as Costco, Wal-Mart and others.

"There's about one million square feet of retail space being added each year to Quebec's food retailing sector," Brisebois said. "Every day is a war out there."

The good news is that Metro is generating wads of cash, a great balance sheet and a long-term track record of revenue and profitability growth. These provide the company great leverage for future expansion.

With strong competition limiting domestic growth options, speculation about a possible acquisition outside of the province remains high. A&P Canada's operations would be a good fit, but competition for those assets, --if they are ever put on the block--- would be strong. Besides A&P there are not too many obvious acquisition candidates.

That limits Metro to a two-fold strategy of milking Quebec's population growth to build sales, and by grabbing whatever it can snatch from industry competitors as well as foodservice and restaurant players.

To do so, the Metro has undertaken a major reinvestment program. In just the first six months of the company's current fiscal year, it put $109.2 million into its retail outlets and added 147,000 square feel of space. That includes nine new store openings and upgrades of another 13.

Much of that investment was in the company's new Metro Plus banner, which features larger stores carrying broader produce offerings as well as organic foods and beauty products sections. This year the company plans to move 19 stores over to the Metro Plus banner, bringing the total from 38 to 55.

But reinvestment is only part of the picture. In fact there are signs that the company has more money than it knows what to do with. Earlier this year, in a tacit admission that its shareholders can do better than the company with the extra cash, Metro raised its intended dividend rate from 20% to 25% of the previous year's profits.

The move also indicates a renewed focus on winning the war in its Quebec home turf. In Quebec's cutthroat market place, the battles take place at street level. As a result, success in merchandizing operations: --boosting productivity and getting more bang for each sales dollar-are increasingly crucial. That's where Brisebois comes in.

Metro currently operates 343 Metro, Super C and Loeb stores, the vast majority of which are in Quebec. Although the average size of the 243 Metro stores is small by Canadian standards (22,300 square feet), that size plays to Metro's advantage because it allows the chain to compete profitably in smaller regional and suburban towns where a bigger outlet would collapse under its own weight.

Quebec's grocery consumers are finicky by Canadian standards. They spend more on food and wine per capita, and they are know their meats, cheeses and breads. As a result, they demand more variety and are willing to pay for special cuts and higher quality. One of Metro's strengths is that few companies are better at tracking their tastes.

The company's independent franchisee owner-operators provide it with front-line entrepreneurial eyes-and-ears, that tend to pick up emerging trends better than competitors' salaried store managers. Even more important, Metro's senior executives including Brisebois, CEO Claude Lessard and newly appointed COO Eric LaFleche are all Quebecers, providing an unparalleled advantage over competitors' Quebec managers who have to report back to head office in Toronto.

Brisebois's challenge is to make sure that the procurement, merchandizing and distribution of every SKU moves smoothly from suppliers, through the nine distribution centers that he oversees directly to the individual store, on a just-in-time basis. It's a position with wide ranging responsibility, for which Brisebois has been ideally prepared.

Although he just 46, Brisebois has been in the food and retail industries for more than a quarter century. After graduating from the University of Montreal's prestigious business school, --HEC Montréal, --his career reads like a non-stop chronicle of success and promotions.

It includes stints at Catelli, Rona-Dismat and the finally at Provigo Inc., where he was senior vice-president in charge of the Maxi, Provigo and Loeb banners. In 1999 he returned to Metro to take on the role of senior vice-president (wholesale operations)

According to Marc Guay, president of Frito-Lay Canada, who has worked with Brisebois on-and-off since their college days in the late 1970s, Brisebois's broad background both with retailers and suppliers provides him with a unique ability to see the big picture.

Guay recalls when he was a salesman at Proctor & Gamble and he went to see Brisebois, -- who was at the time a purchasing manager,-- about a new super-size pack of fabric softeners. Other retailers had been resisting the format, which was two to three times the volume of existing products, but Brisebois signed on immediately.

"He often picks up trends that others are blind to," Guay said.
"He realized that Metro stores were heavily concentrated in residential areas populated by relatively big families that would need more fabric softener."

"Even though at the time he worked in purchasing, he had a very good handle on what his company's own customers were looking for," Guay said.

While industry consolidation and hefty competition has turned almost all food retailers into tough negotiators, Brisebois's ability to see the supplier's point of view, makes him particularly effective Guay said.

"He is a genuinely nice guy. He doesn't push needlessly. He always looks for the win-win situation," Guay said. "Because of that, when he needs something, people are always willing to go the extra distance for him."

According to Guay, another of Brisebois's strengths has been his ability to manage variety within a brand category. That's a lot easier than it sounds, especially at a company like Metro, where in addition to overcoming managerial inertia, changes also often have to get the thumbs up from the powerful franchisees, who generate more than half of the company's sales.

"He is a very good people person," Guay said. "He can talk easily with senior executives, but he can also roll up his sleeves to work with line employees."

In addition to his role in strengthening Metro's operations from within the company, Brisebois has also become its face outside of Quebec, due to his tireless work on key industry associations.

For the past five years, including the last two as chairman, Brisebois has worked with United Grocers Inc. to help the group overcome one of the key problems facing the industry's small and medium sized players: their lack of buying power with major suppliers.

According to Mike Marinangeli, UGI's president, Brisebois, has been a relentless advocate of getting companies to work together and he was a key driving force in integrating two major players, -- A&P and Safeway,-- into the alliance. With the move, UGI now represents approximately 35% of the industry's market share, giving it the clout to negotiate price breaks, greater flexibility and better terms.

Brisebois's most visible industry role has been as chairman of the Canadian council of Grocery Distributors. By all accounts Brisebois's two-year term has been a success. He has been a tireless advocate of the industries' concerns in Ottawa, where he and CCGD president Nick Jennery met with deputy ministers earlier this year. It was during Brisebois's tenure as chair that the CCGD decided to open an office in the nation's capital.

In addition to helping Metro boost its profile outside of Quebec, the position also gave Brisebois the opportunity to work on key issues that affect the industry. These include "smart regulations," food safety, labeling and crisis preparedness.

Despite the Metro's continuing successes, opinions vary about the company's future. According to one long-time industry observer, the stock market continues to underrate its performance, particularly its PE ratio, which despite a recent run-up in share price, trades at a discount to Loblaws and American retailers. This, plus its wide ownership structure, makes Metro a prime takeover candidate.

"Sooner or later another wave of industry consolidation will hit again, and you are going to get U.S. and European players coming around to have a look," said Domenik Dlouhy, chairman of Dlouhy Merchant Group. Dlouhy is unconcerned about Metro's domestic competition. "Every business is tough," he said with a laugh. "But Metros' managers are shrewd players. Don't underestimate them."

Whether Metro buys another company, gets acquired, or decides to go it alone remains to be seen. But according Robert Coutier, president of ADL, a wholesale distributor, the company appears to be well prepared for current CEO Pierre Lessard's impending retirement, which it is thought will take place within next two or three years.

According to Cloutier, who knows both, newly nominated COO Eric LeFlèche --the anointed dauphin,-- and Brisebois are expected to form a good team.

"They complement each other well. Both are in their early 40s and have big dreams," Cloutier said. "Alain is an operator, and Eric has an excellent real estate and legal background. Whatever happens, they have a great opportunity to work together to help spur Metro's growth well into the future."

 

 

 

peter@peterdiekmeyer.com

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