Metcash spends $270m on growth

SUPERMARKET and wholesale distributer Metcash will spend up to $270 million across its three main divisions of food, liquor and hardware over the next five years as part of a new strategy.

Dogged by competition from homegrown giants Coles and Woolworths, as well as Aldi, Metcash is hoping the new costmanagement directive announced yesterday by chief executive Jeff Adams can offset the impact of inflation over the next five years, predicted at around $25 million a year.

Following the announcement Metcash share prices were 2.31 per cent higher, at $2.66 at 1315 AEDT.

The ING supplier has identified potential savings of $50 million over 2020 and 2021 from a number of areas mostly in food-related costs including logistics, property and efficient marketing and promotions.

Food and hardware will benefit from the largest investment under its revised strategy of accelerating successful segments of the business. The largest portion of expenditure about $165 million will go to improving its food and grocery division, which includes the trial of new small format convenience stores.

Following weaker results predictions for hardware in the second half of 2019 reflecting a slow-down in construction activity, $90 million will be invested into brands such as Mitre 10.

Under its liquor portfolio, digital capability has been flagged an area for growth.