How many more “restructure plans” before Metcash is restructured?
In 2013 Ian Morrice assumed office as Chief Executive Officer of Metcash. Morrice was formerly the Group CEO and Managing Director of New Zealand retail chain The Warehouse.
In 2012 he was appointed Non-Executive director on the Board of Metcash and in July 2013 took up his position as CEO.
Since 2013 the supermarket game has not been a walk in the park for Metcash with stiff competition from Coles and Woolworths and the growing prominence of Aldi.
For the 12 months ended 30 June 2013, Metcash reported mixed financial results in what it described “tough trading conditions”.
The company announced a drop in sales in its food and grocery sector of 2.3 per cent from AUD $9.3 billion to AUD $9.1 billion, which it said was largely due to the closure of several of its Campbells branches, and a number of Cornetts and Walters stores in Far North Queensland and Western Australia.
At the time, Morrice said the results were credible considering the economic conditions but that he had indicated a strategic planning process.
“I have initiated a strategic planning process, which will be complete by the end of 2013,” Mr Morrice said. “This process will develop our strategic priorities, growth opportunities and build on the great platform that Andrew (Reitzer, prior CEO to Morrice) and the team have created,” he said at the time.
“A key priority will be to review the Food and Grocery operations to respond to the ongoing deflationary and competitive market conditions. There is an ongoing focus for the group as we continue to invest in our core logistics capabilities, and optimise the value of recent acquisitions and supply contracts,” Morrice said in 2013.
By the end of the year, Metcash’s Food and Grocery was split into two separate divisions described by the company as “necessary to drive execution of the strategic plan currently being finalised”.
In March 2014 Metcash revealed its strategic plan, a five year plan called “Project Diamond”. As part of project Diamond Metcash said it would generate growth through inventory replanning, re-structuring of private labels and various price reductions due to the introduction of a “Price Match” pilot.
Prices on 2500 items were cut in 34 pilot stores to see impacts on sales growth. A reduction on inventory also occurred to make room for new products.
Metcash also said at the time it aimed to convert more independent retailers into its liquor, hardware and automotive banners.
In 2015, Metcash entered what it described as the “Working Smarter” phase of its transformation plan.
It came as the company announced an overall; 20 per cent increase in profit after tax for the six months ended the 31 October 2015 but a decline in food and grocery profit.
In announcing the results Morrice said that Metcash continued to invest in the group’s turnaround.
“We have commenced “Working Smarter”, the next stage of the Group’s Transformation Plan, designed to reduce complexity, make it simpler for customers and suppliers to do business with Metcash and to reduce our cost of doing business,” Morrice said.
“In addition, we will look to develop future growth opportunities and invest in new channels. Recently we have begun exporting Australian product, sold direct to consumers in China through Alibaba’s online Tmall platform, Morrice stated at the time.
In 2015 Metcash also reported its ‘Diamond stores’ which under the Diamond Project signed up for store refreshments and addressed issues surrounding price and fresh produce availability, were experiencing increased sales.
Additionally, in June Metcash 2015 decided to sell the automotive division of its company which included Autobarn and Midas brands.
According to Fairfax, Metcash is now currently planning a new restructure which will see it set up various service hubs to support its private labels instead of the state and national support centres it has now.
It is expected more details will be revealed when Metcash announces it financial results for the 12 months ended 30 June 2016.
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