Metcash says supermarket playing field is unfair

Ian Morris, the soon to be CEO of Metcash will be launching a review into the company’s operations following a recent drop in market share.

Metcash today announced that although its underlying full year profit rose by 6.9 percent to $281 m, the wholesaler lost market share in its core grocery business due to a poor trading environment and a major restructure which included the closure of a number of stores.

Metcash, whose portfolio includes supermarkets chains IGA and Franklins, will be reviewing its online offerings and its relationship with suppliers in face of nationwide deflation and the ever increasing battle for customers between supermarket giants Coles and Woolworths.

As reported by SHM, Morris said that Metcash must help its independent grocery stores drive better results as aggressive cost cutting initiatives from Woolworths and Coles, coupled mounting pressures from new market entrants, Costco and Aldi continues to rise.

"The playing field certainly is not level in grocery in this country at the moment," Morrice said as reported by Weekly Times Now.

"We'll be looking for help from the people who've got the power to level the playing field for us in that regard because, unlike our competitors in grocery, we don't control the petrol stations and the price of petrol.”

Despite the loss in market share in the core grocery business, Metcash shares rose 4.9 percent to $3.61.

Commonwealth Bank analyst Andrew Mclennan said that although the increase in share price came in above analyst expectations, market share remained a concern.

“Market share remains an issue for Metcash,” McLennan said. 

"The longer term trend has been one of a difficult competitive position that's likely to continue.” 

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