Metcash boss vows to take the fight to big two
Incoming Metcash chief executive Ian Morrice will conduct a review of the wholesaler's flagship food and grocery division after a price war between the big supermarket chains lured customers away from its independent stores.
He has also pledged to chase new growth options for the group. Recent acquisitions in the hardware and automotive parts sectors have helped lift profitability.
"Reflecting on the impact that Mitre 10 and automotives ... what's apparent to us is the consolidation job is still to be done in both those independent sectors, and as a very strong third player ... we are very good at consolidating fragmented sectors, and becoming a stronger third player."
Mr Morrice, who will officially take charge as CEO at the end of the month after replacing Andrew Reitzer, promised to ensure the viability of the independent supermarket network in the face of dwindling market share. This has been driven by price deflation and aggressive discounting by Woolworths and Coles.
He will use a review of Metcash's core grocery business to provide strategic direction to stem the dip in sales, while the relationship with the supply and logistics chain, and its digital platform, will also be examined.
Metcash, the No.3 player in the supermarket sector, posted a net profit of $206 million for 2012-13 on Monday, up 129 per cent on the previous year when it recorded costs for restructuring. Revenue rose 3.8 per cent to $13.1 billion.
Metcash, which owns IGA and Franklins, said it suffered a 2.3 per cent fall in sales in its core food and grocery business to $9.1 billion. Although the drop was small, it appears Metcash has been the main victim of the price war between Woolworths and Coles, losing customers to them and possibly newer entrants such as Aldi.
"[The review] is to see how we can help our retailers drive more volume through their stores and more volume through our [centres]," Mr Morrice said.
Mr Reitzer said Metcash remained in a strong position and was weathering the difficult economic conditions.
"It is a challenging time ... with consumer confidence low and the self-service supermarket chains locked in a marketing war," he said.
"The consumer has had three or four interest rate cuts , unemployment is more or less the same and they just won't spend money."