Metcash has announced an AU$480m business overhaul

Metcash has announced an AU$480m business overhaul

Australian wholesale grocer Metcash has announced it will spend up to A$480m (US$437m) to overhaul its business to prepare it for "long-term sustainable growth".

Metcash plans to spend A$100m-$125m to fund store refurbishments, new stores and store buybacks.

The retailer wants to drive efficiency by investing in its infrastructure and also provide better support to its independent retailers through the expansion of its digital platform.

The programme will take place over the next three years. Investment in the first year is estimated to peak at between A$150-$180m in 2015 and reduce to A$130m-$150m in 2016 and 2017.

To fund the project, Metcash will reduce dividend payout ratio to 60% starting from the final FY14 dividend.

CEO Ian Morrice said Metcash wanted to "reignite top-line growth within the food and grocery channel".

He said initial pilot programmes had proved "positive" and that "retailers working with Metcash are strongly supportive of the plan".

Show the press release

Metcash Limited today released details of its transformation plan following a strategic review that began in June 2013. 

 Ian Morrice, CEO of Metcash, said the transformation plan focussed on four strategic priorities that when implemented, would underpin long term sustainable growth for Metcash and independent retailers. These included: 

 

• Transforming Metcash Food & Grocery (MFG), known as Project Diamond; 

• Driving consolidation and sustainable network growth; 

• Further enhancing its world class supply chain; and 

• Enabling Successful Independents. 

 

“Project Diamond is the key initiative for MFG. Following significant research we 

plan to reignite top line growth within the food and grocery channel through 

implementing six growth levers. 

 

“The consolidation and sustainable network growth initiative will see Metcash focus 

on converting more independent retailers to our liquor, hardware and automotive 

banners; extend our retail footprint; reinvigorate our retail execution and enhance the category growth opportunities. 

 

“Metcash is already well known for its logistics capabilities – but our benchmark is 

world best practice. We will drive efficiencies through further infrastructure 

investment; continue to invest in technology; increase flexibility to better serve 

customer needs and reduce our cost of service. 

 

“The final initiative in the transformation plan is providing better support to 

independent retailers. We plan to do this by expanding our digital platform by 

introducing competitive omni-channel solutions locally tailored for retailers and 

providing enhanced analytics and insights capabilities. In addition we will provide 

programs through a Retail Academy, part of attracting and training new retailers to 

the independent network; developing existing retailers’ skills and capabilities and 

provide greater value-adding services to members,” Mr Morrice said. 

 

 

Original source: Metcash