Metcash fights back in supermarket price war might help an...

Metcash fights back in supermarket price war

might help an ailing SP....


Metcash fights back in supermarket price war
THE AUSTRALIAN JUNE 12, 2015 3:31PM


Senior Business Reporter
Melbourne

The supermarket wars are about to escalate with grocery wholesaler Metcash, which supplies thousands of independent supermarkets across the country, pressing the trigger on one of its biggest advertising campaigns this year to spruik its price competitiveness with major chains Woolworths and Coles.

The campaign marks a significant ramp up by the wholesaler to convince shoppers — and just as importantly its independent supermarket owners — of its low-price credentials.

The nationwide blitz will kick off on Sunday and include advertising across TV, social media, online, outdoor and in-store to promote Metcash’s “Price Match” strategy which is focused on slashing prices on popular grocery items.

It is the latest shot in the protracted price wars between Woolworths, Coles, Metcash (MTS) and German discounter Aldi as they all push prices lower to tempt shoppers.

It will be one of the biggest individual marketing spends by Metcash for some time, and reflects the intense pressure it and other grocery retailers face as prices are slashed to lure in shoppers.

It comes as Woolworths has promised to invest more than $500 million in lower prices this year as it strives to match arch rival Coles and neutralise Aldi.

Metcash’s independent supermarkets have been among the biggest losers in the price wars to date, losing market share to the majors as well as Aldi.

Last week Metcash was forced to announce a $640 million writedown of its assets, mostly driven by the worsening performance of its flagship grocery arm.

The wholesaler is now fighting back, with Metcash general manager for national sales and merchandise Peter Love sending a letter to grocery suppliers alerting then to the campaign and asking them to contact the wholesaler on how they can “be involved and assist further”.

The letter, obtained by The Australian, says the “massive above the line” campaign for independent supermarket brand IGA will focus on the benefits of independent retail.

“The campaign will be seen on TV, social media, on line, outdoor and in store — you won’t miss it,” Mr Love says.

Metcash will also book press wraps across newspapers, and advertise in high rating TV shows such as news broadcasts and lifestyle programs. It has also booked billboards across the country as well as on the sides of buses.

Already Metcash has cut grocery prices by 3 per cent to move closer to Woolworths and Coles. This campaign could signal another round of price cuts to help make independent chains more competitive.

A recent report from consumer advocate group Choice claimed IGA was the most expensive of the four supermarket chains with the same basket of goods 8 per cent more expensive than at Coles.

This has put pressure on Metcash boss Ian Morrice to reduce margins, drive efficiencies and offer lower prices to wholesale customers.

“The success of the independent sector is critical for both of us, and we thank you for your continued support,” Mr Love has written to suppliers.

“Together we can continue to drive the program hard, execute with excellence in store and ensure full supply of key lines during our launch and ongoing with Price Match.

“Please make contact with your national category manager or national buyer to see how you can be involved and assist further.”

On Monday Metcash will present its full-year results where Mr Morrice is expected to unveil the details of a new strategy review that could include the sale or IPO of its auto parts division, with funds expected to be injected back into its grocery arm to help it better compete.

http://www.theaustralian.com.au/bus...market-price-war/story-e6frg8zx-1227394857255