Metcash, the operator of IGA supermarkets, is strategising to become Australia’s preferred supermarket by focusing on reducing prices in its smaller and medium-sized stores. This move aims to attract value shoppers and intensify competition with major rivals Woolworths and Coles. Doug Jones, Metcash’s CEO, is determined to change the perception that IGA stores are pricier than major supermarkets. He highlights the growth in their private-label range and the expansion of their price-match program.
Despite past perceptions of being expensive, Jones asserts this is increasingly less common, especially in larger stores. Metcash’s recent profits increased by 12.2%, reaching $141 million in the first half of the 2024 financial year, thanks to higher earnings in the food and liquor segments.
The retailer has seen a rise in sales volumes and foot traffic, although Australians still primarily shop at Coles and Woolworths for groceries. Jones aims to change this habit by emphasising IGA’s unique value proposition and competitive pricing.
Ahead of Christmas, IGA is intensifying its price-matching efforts with popular seasonal items and is actively enhancing its marketing campaigns. Metcash’s hardware business also showed positive sales growth.
Metcash is also monitoring the Senate inquiry into Woolworths and Coles’ market power and pricing strategies. Jones supports competition improvements in the grocery sector and expresses concern over these companies’ acquisitions of other businesses.
While Metcash’s food sales are robust, challenges remain, such as declining margins in the hardware business and decreasing tobacco sales. Analysts view Metcash’s performance as solid in a challenging market, though hardware sales were expected to be stronger.
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