Australian retail group Metcash has told investors this morning that it is on the turnaround after posting a loss of A$384m in the year to April 2015.
Supplying more than 2,400 independent retailers including IGA, as well as convenience stores, Metcash has announced a focus on competitive pricing, compelling and improved fresh range and a ‘shopper-led’ way.
Launching it Pricematch ranges in September 2014, with a national ad campaign from June 2015, Metcash said its results had helped significantly with non-IGA shoppers changing their perception of IGA as ‘costing the most’, with retail sales on Pricematch items up 15 per cent.
Metcash’s ‘Diamond Store’ strategy to refurbish stores with a new store format has also helped, with fresh food sales at these stores up 20 per cent, and a further 100 stores expected to be opening this year.
Peter Pokorny, GM of Fresh, said that fresh has becoming increasingly important, now accounting for 48 per cent of annual grocery spend, according to a Nielsen Homescan data, and is a major factor in consumers choosing where to shop.
Increased competitive in the grocery sector with German-discounter Aldi expanding into South Australia and Western Australia has seen IGA stores’ sales take a hit.
Morningstar analyst Gareth James told AAP that creativity was needed amid rising competition, with Aldi’s low-cost model sparking a fresh price war among major retailers.
“Aldi can sell products cheaper than other supermarkets,” James said. “It will win market share wherever it expands into and most of that market share will come from the independents.
“There is a huge risk that Metcash is going to be squeezed and it will be the key loser as a result of the increasing competition.”
In July this year, Metcash announced the appointment of former Coles group managing director Steven Cain as CEO of supermarkets, while former Woolworths employee Mark Hewlett was appointed executive GM of new channels.
