Grocery wholesaler Metcash will make a renewed push for the $10 billion convenience store sector through better fresh-food offers and new product lines, rather than by trying to win on prices against the big supermarkets.
The grab for a greater slice of the market is part of a new Metcash strategy to harness the milk-bar, petrol and small-cafe market segment to compete with the supermarkets to increase the number of customers for its wholesale operation.
Metcash, which wholesales to 7-Eleven and is chasing a similar large supply contract with BP, believes convenience stores need to change the way they do business if they want to survive in the face of the petrol discounts offered by Coles and Woolworths.
Last year Metcash chief executive Andrew Reitzer warned that the aggressive price war between Coles and Woolworths would force old-fashioned independent corner stores to the wall and that unbannered convenience stores would cease to exist.
Peter Dubbelman, Metcash chief executive of convenience, said the wholesaler had 15 per cent to 20 per cent of the convenience store sector and recently upgraded its 15 distribution centres to allow them to deliver small parcels, right down to individual bottles of drink, to corner stores.
"What we want to do is take a slice of Coles and Woolworths' market share away," Mr Dubbelman said.
"For every convenience store the staple product was milk, now consumers are going to the chains because they are value conscious. So, there has been a shift of consumers which the big chains have planned, but they still have one big dilemma - they are not convenient.
"The value proposition we hold is our convenience store operators need to differentiate. Forget about milk, come up with fresh categories like ready-to-eat or ready-to-heat meals, gourmet sandwiches, so the time-poor consumer has a real choice of going into a convenience store and finding the offer.
"You change the game. Get away from the tobacco, newspaper, milk, - keep doing that, but focus on fresh, on having an offer that the consumer wants."
Part of this new model was showcased by Metcash at a convenience store convention in Melbourne this week, with a small-format store model featuring new fresh categories, such as fruit and vegetables, as well as new categories such as hardware.
Metcash is also keen to leverage its new acquisition, car-parts business Automotive Brands, to offer convenience stores a range of car accessories.