Metcash benefits from shop local trend

Metcash says sales continue to benefit from the change in consumer behaviour since the advent of Covid-19.

Chairman Robert Murray said consumers have been shopping more in their local neighbourhoods since the advent of Covid-19, bringing new customers to independent Metcash businesses which the company is focusing on ensuring they are retained in the future.

In a trading update released at its annual meeting today, CEO Jeff Adams said total sales are up 11.4 per cent in the first quarter of the new trading year, with supermarket sales – excluding tobacco – up by 13.8 per cent.

Last financial year, Metcash lost the Drakes supermarket chain in South Australia as a customer. Excluding those sales from the previous comparable year’s figures, total food sales are running 14.9 per cent ahead and supermarket sales 18.4 per cent.

Sales of liquor rose 11.4 per cent, despite various restrictions in retail and on-premise trading across Australia and New Zealand during the quarter relating to Covid-19 control measures. Excluding customers impacted by the restrictions, liquor sales were running 23.2 per cent above the same quarter last year.

The company’s hardware division recorded a 19.2-per-cent increase in first-quarter sales underpinned by strong demand across DIY categories due to consumers spending more time at home during the Covid-19 crisis.

However Metcash has felt an impact from the pandemic in Melbourne since the government introduced restrictions on August 2, requiring a one-third reduction in warehouse staff, the closure of 36 IHG retail stores in metropolitan Melbourne and consumer DIY sales restricted to click & collect or online delivery.

Adams said that all the group’s business sectors are facing “significant volatility and uncertainty” due to pandemic-related restrictions.

“Operating costs across all pillars remain elevated as the business continues to respond to the strong demand from customers, the increased volatility and incremental costs associated with managing the health and safety of both our employees and customers.”

This article was first published on Inside FMCG, a sibling website to Inside Franchise Business Executive.