Metcash boss confirms review, with possible job losses in supermarkets arm restructure

The CEO of wholesaler Metcash, Doug Jones, has confirmed the company is conducting a review of its flagship supermarket division to better cope with the changing retail landscape.

Metcash chief executive Doug Jones has confirmed the wholesaler is conducting a wide-ranging review of its flagship supermarket division to better cope with the changing retail landscape, which could include job losses as costs are taken out of the business.

Mr Jones said while job losses at the company’s head office were not the sole aim of the review, they were possible as it reined in spending in some areas.

He said the review and possible restructure were vital to prepare Metcash and its key supermarket arm as it faced increasingly tough competition. The unit delivers 40 per cent of group earnings through the supply of food and groceries to independent supermarkets such as IGA and Foodland.

Mr Jones’ confirmation that Metcash had begun rethinking its supermarket wholesale operations and structure follows The Australian reporting that Metcash was assessing the structure of the business and considering whether changes were needed to meet competitive challenges.

According to insiders, one team is looking at the best future structure for the food and supermarkets division, which generator $9.6bn in revenue.

A second team is focusing on cost cutting, as recent investments in areas such as online and supply chains come under pressure from moderating inflation and falling sales revenue squeezes profit margins.

That margin pressure was evident last week when Metcash revealed that sales growth at its food and supermarkets pillar had slowed considerably and that its independent supermarkets were ceding market share to rivals Woolworths, Coles and Aldi.

“Obviously we are doing a program that any healthy business should do on a regular basis, and that is making sure that our businesses are future-fit,” Mr Jones told The Australian after its annual general meeting on Friday.

Metcash recently appointed Grant Ramage as its supermarkets boss, and Mr Jones said he was taking a fresh approach to its strategies and direction.

“We have new leadership in the food business and so obviously Grant had some time to get his feet under the desk and is still to put his imprint on it. I don’t think it’s anything that would or should attract too much attention – it’s normal and healthy.

“We’re increasing our investment in certain areas … and we are making sure that as we complete some of the strategic programs that have served us so well, that we’re not continuing to invest beyond where we should.

“It’s a healthy part of any business and, frankly, any business in Australia today that isn’t taking a look at their structures and their cost base probably isn’t earning their salaries.”

Mr Jones said job losses at its corporate headquarters could be one result of the review.

“There could be (redundancies) but it is early days in the process, we are going to do what is right for our business for the long term. But this is not about reducing the headcount … we are not approaching it that way … There could be (job losses) but that is not what I would say is the objective of this. We want a healthy, modern, future-fit business and we are getting on with that.”

Last week Mr Jones said the wholesaler’s independent supermarkets like IGA and Foodland had lost some market share to their heavyweight rivals, but he argued its stores were still very competitive.

The Metcash trading update presented to shareholders at the AGM revealed for the 18 weeks to September total food sales, ex-tobacco, was up 6 per cent but only up 1.1 per cent including tobacco. This was down from growth of around 1.9 per cent for the first seven weeks of fiscal 2024.