Metcash outlines its sustainable growth strategy

Metcash has published its annual report, which highlights the significant progress it has made in a number of key areas, as well as how the company is progressing with its MFuture program, designed to provide a pathway to sustainable growth.

Chairman Rob Murray said that the early success of the MFutures initiatives had laid the foundations for both Metcash and its independent retailers.

“The improved competitiveness of our retailers was a key factor in their retention of new and returning customers gained through COVID which, together with the continuation of an increased preference for local neighbourhood shopping and the migration from cities to regional areas, drove strong sales growth,” Murray said.

He added: “We are now two years into the MFuture program designed to provide a pathway to sustainable growth for Metcash, balanced with cost efficiencies. This year significant progress was made with key initiatives such as our store upgrade programs, rolling out new store formats, expanding our private and exclusive label ranges and accelerating our digital plans.

“We also sharpened our strategic direction to include an increased focus on customers and the community to support our aim of further improving the competitiveness of our retailers.

“The early success of MFuture has provided a strong foundation for the remaining three years of the program, which includes initiatives to retain new and returned customers gained through COVID, as well as attracting new shoppers to our retail networks.”

Looking ahead, Murray said: “While it has been an exceptional year for Metcash, shoppers are continuing to enjoy visiting their local independent stores in our Food, Liquor and Hardware network with sales in the early part of FY22 continuing to be elevated against pre-COVID levels.

“Making our retailers more competitive has proven to be the right strategy for Metcash.

Importantly, we continue to be well positioned with a strong financial position that includes flexibility to invest in our growth plans. Our sharpened MFuture plans for the next three years aim to further improve our retailers’ competitiveness and include a balance of good growth and cost out initiatives.

“While our Hardware pillar is already positioned with leading digital technology, we are stepping up our investment in digital to accelerate the delivery of solutions for our Food and Liquor retailers who now have an increased interest in these solutions.

“We are also investing in a new project named ‘Horizon’ which aims to drive efficiencies through simplification, as well as growth through making it easier to do business with Metcash. This will be a staged program with the first phase focused on simplification and building a better future operating platform.”

While Metcash has already reported strong food growth in its financial results for FY2021, Group CEO Jeff Adams also highlighted some key achievements for the food pillar in the year.

“The Food Pillar continued to make good progress with its MFuture initiatives. Store upgrades under the Diamond Store Accelerator (DSA) program have reached 622, with ~45 per cent of the IGA network now refreshed.

“The average sales uplift for DSA stores is greater than 10 per cent, and we plan to upgrade a further 100 to 130 stores per year over the next five years.

“Under our new store format trials, the first Supa Valu large format store was opened in Doonside, NSW in May last year, and a second store was opened in Ballina, NSW in March this year. The stores have been very well received and we anticipate working with our retailers to open more of these large format stores over the coming years.

“Our Fresh Pantry small format store trial has been completed and we are now in the process of embedding the learnings from the trial in our future network plans.

“Following the successful launch last year of our IGA Priority Shop and IGA Shop Online, further development was undertaken to deliver a next generation e-commerce platform for the IGA network. Trials of this next generation platform commenced towards the end of FY21 and we are looking to roll this platform out to ~800 of our IGA stores by FY25.”

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