Metcash trialling smaller formats, corporate stores as part of five-year plan

Supa-IGA2Metcash has provided an update on its five-year plan to transform its food, liquor and hardware divisions, which was first revealed last year. The vision, referred to internally as MFuture, involves trialling new store formats and ownership models across its collection of retail brands.

Metcash’s food division, which brings together IGA, Supa IGA, IGA Xpress, Foodland and Friendly Frocer/Eziway, will begin piloting a small format store program, as well as ensuring each stores range and pricing are appropriate.

According to Metcash, smaller format stores are the fastest growing store format globally, and Australia is well behind the trend. The retailer is planning an initial rollout of approximately 150 small format stores following a 10-store trial.

In the last five years, Metcash’s food division has faced significant headwinds, most notably the intense competition from local rivals Woolworths and Coles, and international entrant Aldi.

As such, the group is looking to capitalise on global trends in the grocery industry, such as the demand for smaller stores in more convenient locations, fast delivery and pick-up services and ready-to-eat options.

Metcash said it has potentially stretched the IGA brand too far and will lean more heavily on its alternate brands going forward.

The group’s liquor division, which includes Cellarbrations, the Bottle-O, IGA Liquor, Thirsty Camel, Big Bargain Bottleshop and Porters Liquor, is currently the second largest player in the alcohol market in Australia.

The retailer has said it will explore ‘best-in-class’ corporate stores with a 10-store trial set to be completed by the end of FY20. These stores will serve as a testing platform for new retail concepts, which could then be pushed out across the larger network.

Finally, the group’s hardware division, which encompasses Mitre 10, Home, Timber and Hardware, Hardings, Thrift-Link Hardware and True Value Hardware, will invest in more products and options for customers, as well as installation services.

A store refurbishment program, called the Sapphire Program, will see approximately 200 of the group’s stores updated to become ‘modern and leading edge’ by 2022. Stores that have already been updated have seen store sales grow by 15 per cent.

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