The big change coming to this supermarket
It has been revealed that the owner of IGA will spend $165 million modernising the independent supermarkets to compete with Woolworths, Coles and ALDI.
In a presentation on Monday, grocery wholesaler Metcash announced that it will invest about $165 million within the next five years to upgrade stores, establish more competitive pricing, and create promotional and loyalty programs for customers. The stores will also offer different ranges based on their location and size.
"It's a very good network of [IGA] stores that we have but it’s clear that it’s a business that has come under pressure from the market in the past three of four years, and it’s clear it's suffered from an under-investment over a number of years," said Metcash’s chief executive Jeff Adams.
"And that under-investment had resulted in that network falling behind global trends."
The investment will take the form of "diamond store accelerator" program, where store owners can access secured loans from the company to fund refurbishments. The company expects 500 stores to participate in the new program.
This is an advancement from the company's previous store renewal program, which had helped 320 stores boost sales by more than 10 per cent through rebates instead of capital investment.
It also represents a shift in the company's strategy, which had focused on cutting costs by up to $125 million over the past three years.
The company will also spend $10 million to build 10 trial small IGA convenience stores, beginning with one in Bondi, NSW this year. If successful, Metcash will roll out up to 150 stores with the same format.
Metcash has been lagging behind other grocery chains. According to IBIS World, Metcash only had 7.4 per cent market share in the 2017-18 financial year, well below Woolworths' 37.2 per cent and Coles' 30.3 per cent. ALDI was also ahead with 9.2 per cent.
Metcash is also looking to expand its liquor retailer brands such as Cellarbrations, Bottle-O and Thirsty Camel by building new stores and acquiring more of the existing bottle shops that it supplies for.
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