Metcash is splitting its operations

Metcash is splitting its operations

06-Jan-2014
Less than two years after merging its grocery distribution and convenience businesses, grocery wholesaler Metcash is separating its food and convenience operations as part of a wide ranging strategic review.

Metcash chief executive Ian Morrice, who announced the strategic review soon after taking the helm last June, said the split would make the turnaround of the supermarkets business easier and enable the company to focus on growth opportunities in the convenience business.

"To provide a greater turnaround platform for our supermarkets business and optimise the growth opportunities identified in the convenience channel, we have decided that the Metcash food and grocery pillar will be run in two divisions, each led by a separate CEO," Mr Morrice said.

Metcash's chief operating officer, food and grocery, Silvestro Morabito, will leave the company later this month to pursue other opportunities, as his position will disappear.

Fergus Collins,who is currently the chief executive of Metcash's liquor distribution business, ALM, will become CEO of supermarkets.

Scott Marshall, currently general manager of merchandise and marketing at ALM, will take over the role of ALM's CEO. A new CEO of convenience will be appointed in the near future.

Mr Morabito was head of IGA Distribution until January 2012, when Metcash merged the grocery and convenience businesses.
At the time, Metcash's former chief executive, Andrew Reitzer, said the consolidation of IGA Distribution, IGA Fresh and Campbells Cash & Carry into a single unit with sales of $9.7 billion would enable Metcash to harness its buying power and distribution capabilities and reduce duplication.

Mr Morrice, who took the helm from Mr Reitzer last June, said the new structure would deliver a more focused approach to managing the food and grocery pillar and was necessary to execute the strategic plan.

Last week Mr Morrice outlined a five-year turnaround plan aimed at restoring sales and profit growth by closing the gap between prices at Metcash's independent grocery retailers and the major chains, striking better deals with suppliers in return for higher volumes and by rolling out a wider range of private label groceries.

The former chief of New Zealand discount department store chain The Warehouse also outlined plans to boost sales of fresh food in IGA stores to drive higher basket spending, improve store formats, boost online sales in grocery, liquor, hardware and automotive products and use data from more than 1000 independent retailers to achieve better insights into shopping behaviour.

Metcash also plans to convert all its remaining Campbells Cash & Carry stores to a new big-box format, Value Depot.

Mr Morabito was one of four internal candidates under consideration to take over as chief executive when he retired next calendar year.

The new structure means Metcash will no longer release separate sales and earnings for IGA distribution and Campbells
"I would like to pay tribute to the role Silvestro has played in the business. He has been leading Food & Grocery through a very challenging trading period battling the issues of price deflation and intensified competition.

"I wish Silvestro and his family all the very best for the future," Mr Morrice said.

For the original article from WA Today click here.