Metcash, one of Australia’s leading wholesale distribution and marketing companies, has undergone a change in leadership, with Grant Ramage appointed as the new chief executive of their supermarket division. As he oversees as many as 1600 independent supermarkets across the country, Ramage has noticed a shift in consumer behaviour since the start of the year, primarily due to the impact of consecutive interest rate rises on consumer spending.
Consumers are becoming more cautious about their expenditure, and this has led to an increase in the sale of private label groceries and cheaper frozen foods. This trend is considered a litmus test of consumer confidence, and it has been observed in the recent reporting season, with Woolworths and Coles reporting a rise in private label sales and a shift from fresh to frozen and canned goods.
Metcash is the third-biggest player in the $100bn supermarket sector, behind Woolworths and Coles, and just ahead of Aldi and Costco. These competitors are snapping at the heels of independent supermarkets that use Metcash as a wholesaler. However, Ramage believes that Metcash has an advantage over its competitors due to its focus on promotional programs that offer value to shoppers.
The company’s food and grocery division generated sales of $9.522bn in 2022 and posted a 9.6% lift in earnings to $200.3m, helped partially by the popularity of neighbourhood IGAs and independent supermarkets through the worst months of the pandemic and lockdowns.
Ramage believes that Metcash-aligned supermarkets have a “fantastic differentiation” in their stores, as well as being more competitive on price. He attributes the success of local IGAs to the improved value, good ranges, high-quality stores, and community support they provide.
During the pandemic, many shoppers used local IGAs for the first time and liked what they saw, staying as customers when lockdowns ended and larger shopping centres opened again. This helped to give a boost to Metcash’s supermarkets, which had already begun to return to growth before Covid-19 hit.
As the new boss of Metcash’s largest division, its supermarket wholesale pillar, Ramage is confident that the company is in the best position ever to offer value to shoppers. He believes that Metcash has some of the best supermarkets in Australia, and people are trading across supermarkets and changing habits, such as going out to dinner less and buying food from the supermarket.
Metcash’s supermarkets have great fresh offers and ranges, and people will make those choices. With its focus on value and community support, Metcash’s supermarket division is poised for continued success in the Australian retail landscape.