Metcash briefs investors on transformation progress

More than 70 industry fund managers, shareholders, analysts and banks attended the Metcash Investor Day in Sydney on September 29, during which a range of key executives provided an update on the progress of the company’s transformation strategy.
“We made it clear in the pre-invites that it wouldn’t be a financial update: it would be very much an operational update on the strategy on how we’re progressing,” Metcash CEO Ian Morrice said.
Mr Morrice said that while Metcash was a world-class wholesaler, “we need to continue to challenge ourselves to be the most efficient supplier of products for manufacturers and for independent retailers in the market, and that’s a very important focus for us”.
He said this world-class supply model had been augmented over the past two years with more insights for the company’s shopper-focused retail banners and he pointed to the fact that “we manage the consumer programs for each of those banners as well as now help them with refurbishments and carrying out investments in their businesses”.
With ALDI’s entry into South Australia and Western Australia looming, Mr Morrice said the independents were primed to rise to the challenge.
He said the best retailers in SA under IGA or Foodland were the best supermarkets in Australia – “the best supermarkets in the sense of the performance that they produce, but also in terms of the offer that they have for their local customers.
“In the case of the new competitor coming into South Australia, we’ve got our strongest retailers in that state,” he said. “They’ve been, first of all, paying very close attention to the pricing and the price proposition for the last 12 months, they’re highly competitive and they’ve also been improving their fresh-food offer quite significantly, which is already a key strength of their business.
“I believe the Foodland and IGA retailers are absolutely on the front foot with a new competitor coming to these states, and I’m confident that they’ll perform well in the face of that new competition.”
While WA does not benefit from the highly supported Foodland banner, it still holds a strong share for IGA retailers, and in advance of ALDI’s offer of low prices, Mr Morrice pointed to significant uptake of the Metcash Price Match program from WA retailers.
“We’re also fortunate in Western Australia to have some of the best stores and some of the best retailers there also,” he said. “And again I think they’re well equipped and well prepared for the new competition coming to town.
“We’ve also got a number of store openings being planned in Western Australia, so retailers are still investing over there and opening new space.”
In convenience, the Campbells flagship store trial ranging at Alexandria in Sydney has now been rolled out across all Campbells branches, while in hardware, Mitre 10 continues to benefit from a strong trade component in its sales revenue. Mitre 10 trade business comprises 50 per cent of sales and Mr Morrice says Bunnings trade sales accounts for a much lower 20 per cent.

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