Metcash takes on Woolies, Coles

INCOMING Metcash boss Ian Morrice will review all aspects of the grocery and liquor wholesaler, including its private-label strategy and marketing budget, as the 30-year retail veteran takes on one of the toughest roles in corporate Australia - battling Woolworths and Coles.

Replacing CEO Andrew Reitzer, who will leave on June 30 after leading the company for 15 years, Mr Morrice said Metcash's independent supermarket customers could beat the supermarket duopoly but it wasn't necessarily a battle over who had the cheapest prices.

"Our job as a wholesaler is to ensure our customers can compete as best they can with the chains who have got much more scale.

"But [we also want to] help them to understand where they can differentiate, because one could argue . . . the two chains [Woolworths and Coles] are quite similar to each other in many ways, whereas the benefit of the IGA network is these are local people who have got local businesses who understand the local customers."

For the next three months the Scottish-born Mr Morrice will work closely with Mr Reitzer before entering the trenches of the supermarket wars.

Mr Morrice, 52, said Metcash had a battle on its hands as Woolworths and Coles fought an intense price war. "The challenge facing Metcash in food and grocery, in part, in the last couple of years, has been food deflation and obviously that has direct impact on the wholesale part of the model."

But Mr Morrice said Metcash's customer base of independent supermarket chains, trading under the IGA banner, could offer a lot more than just cheap prices.

"I think IGA supermarkets have got a lot of benefits the chains can't ever have, the benefits of local ownership and the passion to deliver in many instances outstanding customer service. Big chains can become more effective at those things but I don't think big chains can match the very best of the independents."

Mr Morrice said there was a place for a strong private label offering but it would be reviewed along with all other aspects of the business including marketing.

Metcash was forced to lift its marketing spend last year.

"We can be as competitive as we want to," Mr Reitzer told Business Day. "Remember what's happening today is not a price war, this is where the media has it totally wrong, it's a marketing war."