29 September 2015 Investor Day – Part A

Metcash Limited
ABN 32 112 073 480
50 Waterloo Road
Macquarie Park
NSW 2113 Australia
29 September 2015
ASX Announcement
METCASH INVESTOR DAY
Metcash Limited (or the “Group”) will today hold an Investor Day focussed on
updating investors as to progress made implementing the Group’s Transformation
Plan.
Presentations will be provided by the Group CEO, the CEO of Supermarkets and
members of the Supermarket management team as well as by the CEO’s of the
Convenience, Liquor and Hardware businesses.
The slide pack used for the presentations is attached.
For further information:
Stephen Woodhill
Group General Manager Corporate Affairs
Ph: +61 0413 318 455
METCASH 2015
Investor Day
INTRODUCTION
IAN MORRICE
GROUP CHIEF EXECUTIVE OFFICER
Page 2
AGENDA
Page 3
10.00 am
Introduction
Ian Morrice
10.15 am
Food and Grocery – Marketing Insights
Madeleine Fitzpatrick
10.40 am
Food and Grocery – Diamond Store Accelerator Program
Roy Leisk
11.10 am
Food and Grocery – Compelling Fresh
Peter Pokorny
11.20 am
Food and Grocery – Supporting Successful Independents
Russell Parker
11.40 am
Break
12.00 pm
Food and Grocery – Shopper Led Way
Andrew Clark
12.20 pm
IGA National Council - Support for F&G Strategy
Ben Ryan
12.35 pm
Food and Grocery – Overview
Steven Cain
12.55 pm
Food and Grocery Q&A session
Ian Morrice
1.10 pm
Lunch
2.00 pm
Convenience – Overview and Update of Initiatives
Peter Struck
2.20 pm
ALM – Overview and Update of Initiatives
Scott Marshall
2.50 pm
Mitre 10 – Overview and Update of Initiatives
Mark Laidlaw
3.25 pm
Chairman, Metcash Group
Rob Murray
3.40 pm
Wrap up
Ian Morrice
4.00 pm
Drinks & Canapes
OUR PURPOSE
SUCCESSFUL INDEPENDENTS
OUR MODEL
OUR VALUES
OUR MARKETS
INTEGRITY IS THE FOUNDATION OF OUR VALUES:
DELIVERING
VALUE
Page 4
 Supporting our customers and suppliers
 Our people are empowered and accountable
 Adding value in our community
FOOD &
GROCERY
OUR VISION
HARDWARE





Growing our markets and delivering value to our stakeholders
Distribution and merchandising excellence
Retailer and consumer champions
Successful and passionate independents
Great place to work
LIQUOR
SUPERMARKETS
CONVENIENCE
METCASH’S
FAMILY OF
INDEPENDENTS
LIQUOR | RETAIL
LIQUOR | WHOLESALE
HARDWARE
Page 5
METCASH’S NATIONAL
PRESENCE
SUPERMARKETS
RETAIL
NETWORK1
WHOLESALE
CUSTOMERS2
1,455
~1,000
CONVENIENCE
18
~190,000
HARDWARE
400
~400
LIQUOR
7,7543
~5,000
NORTHERN
TERRITORY
QUEENSLAND
BRISBANE
WESTERN
AUSTRALIA
PERTH
SOUTH
AUSTRALIA
NEW SOUTH
WALES
SYDNEY
ADELAIDE
VICTORIA
MELBOURNE
MECASH DISTRIBUTION CENTRES
1. Includes stores trading under Metcash’s banner groups as @ 15 June 2015
2. Customers supplied outside of Metcash’s banner groups
3. Includes 5,183 on-premise Cellarbrations customers
Page 6
Five major distribution centres
Ten smaller DC facilities
FOCUS OF OUR STRATEGY
SHOPPER-FOCUSED RETAIL BANNERS
SUPERMARKETS
Diamond
 Competitive Pricing
 Compelling Fresh
 Range & Private Label
 Store investment (DSA)
 Service
Build IGA differentiators
 Individual character
 Heart & soul of community
Page 7
CONVENIENCE
Campbells
 Shift to food service
 House brands
 B2B digital
C-store distribution
 Extend network reach
 Growth category focus
LIQUOR
HARDWARE
Grow IBA retail banners
Grow the Mitre 10 network
Like for like growth
 Build the retail brands
 Category management
 Store investment
Like for like growth
 Core range & Private Label
 Sapphire store investment
 Store in store specialists
 Optimise JV performance
Extend ALM wholesale base
Build Trade differentiator
WORLD CLASS WHOLESALER
SUPPORTING INDEPENDENTS
IGA STRENGTHS, SHOPPER INSIGHTS
IGA OPPORTUNITIES
MADELEINE FITZPATRICK
GM MARKETING
Page 8
 1,455 stores owned independently
 Catering to local markets
OUR BIGGEST
STRENGTHS
WE’RE
INDEPENDENT
IGA IS A
STRONG BRAND
Page 9
 Offering localised range
 Integral to local communities
 Research shows willingness of consumers
to support independent retailers
 Social listening surveys show disproportionately
high number of brand promoters
 IGA has most loyal customers – Morgan Research
AUSTRALIANS ARE SHOPPING MORE
FREQUENTLY, BASKET SIZES ARE SHRINKING,
BUT THEY’RE SPENDING MORE
CAPTURING
CUSTOMERS’ HEARTS
AND MINDS MEANS
UNDERSTANDING
TODAY’S AUSTRALIAN
SHOPPERS
Page 10
LOOKING FOR INSPIRATION, FRESH & SOLUTIONS
(READY MEALS, ONLINE SHOPPING & DELIVERY/CLICK N COLLECT)
IGA OVER-INDEXED
IN BUY AS YOU NEED
MISSION
IGA’s OPPORTUNITY
IS IN FRESH & MEAL
SOLUTIONS
AND WE’VE
LISTENED TO
WHAT OUR OWN
CUSTOMERS
SAY ABOUT US
Page 11
+ 100,000 OF THEM
CUSTOMERS
LOVE IGA
BUT…
Page 12
I LOVE MY LOCAL IGA
BUT
Because the staff are so friendly
Their prices need to be more competitive
Because it’s easy for me to get in and
out quickly
The quality and range of their fresh food
can be improved
Because they support my community
Ranging and availability are an issue at times
RESPONSE
PRICE MATCH
Competitive on price
COMPELLING FRESH
Improved range and value
SHOPPER LED WAY
Continuous category management
COMPETITIVE
PRICING






Page 13
ACHIEVE SUSTAINABLE COMPETIVENESS
IN SHELF PRICE AND COMMUNICATE
THIS CLEARLY TO THE SHOPPER
Price Match launched September 2014
~900 stores on competitive price program
Basket of proprietary and private label brands
Prices matched weekly to competitors every day price
Dynamic program – SKUs adjusted to maximise effectiveness and return
National advertising program from June 2015
LAUNCH OF
PRICE MATCH
TELEVISION
Page 14
OUTDOOR
HOME PAGE
TAKEOVERS
SHOPPER
BAGS
SOCIAL
MEDIA
PR
OUTCOME OF CAMPAIGN TO DATE
SENTIMENT:
 In market response strong, key
measures tracking positively
 Awareness doubled 4 weeks post
launch
 Willingness to consider IGA is
improving
SURVEY RESULTS:
 Statistical significant
improvement in EDP perception
amongst shoppers across most
household segments
 EDP perception of Price Match
stores improving
 Non-IGA shoppers significantly
less likely to think IGA “costs the
most”
PRICE MATCH RESULTS:
 Price Match program generated a
340 basis point improvement in
wholesale sales1
 Retail sales on proprietary Price
Match lines up 15%2
 Retail sales of Black & Gold up 7%2
 Basket size & transaction numbers
up2
1
Represents LfL wholesale sales movement (excluding
tobacco) compared to pre Price Match comparable
period of ~830 stores
Millward Brown, Aug 2015 Wave Tracker
Page 15
Latitude Insights, Q2 2015 vs Q4 2014
2 Scan
data from 402 stores with greater than 13 weeks
on Price Match, excludes tobacco & liquor
WHAT OUR BRAND
STANDS FOR WILL
DIFFERENTIATE US
FROM THE REST
Page 16
 Personalities
 Experiences
 Stories
 Cultures
 Passions
 Expertise
IT’S WITH THIS MINDSET THAT WE
CAN DIFFERENTIATE ON OUR OWN TERMS
Three core brand ingredients that embody the best of the network
Individual
Character
Page 17
Service
with Soul
Heart of the
Community
METCASH HAS THE
FUNDAMENTALS FOR SUCCESS
SHOPPER INSIGHTS
THE BEST INDEPENDENT
RETAILERS ARE ALREADY
DIFFERENTIATING AND THRIVING
Page 18
IGA
 Today’s shopper wants convenient
shopping
 The 1,455 most conveniently
located supermarkets in
Australia
 The “Buy As You Need” shopping
mission is already > 50% of sales
 IGAs offer is more tailored to
meet this mission
 “I want the freshest local product
possible”
 Localised range unique to each
store
 “I want value”
 Competitive everyday pricing
 Service is still important to grocery
shoppers
 Passionate local owners
IGA
Page 19
We’re a diverse
network of proud
independents
intrinsically part of
local communities
all over Australia
DIAMOND STORE ACCELERATOR PROGRAM
ROY LEISK
NATIONAL OPERATIONS MANAGER
Page 20
SHOPPER INSIGHTS
CONSUMER
PRIORITIES*
PRICE
FRESH
RANGE
CUSTOMER SERVICE
STORE
ENVIRONMENT
COMPETITIVE
PRICING
COMPELLING
FRESH
SHOPPER
LED WAY
RETAIL
EXCELLENCE
NETWORK
INVESTMENT
METCASH
RESPONSE
DIAMOND LEVERS ADDRESS THESE PRIORITIES
* Source: IGA customer satisfaction surveys
Page 21
WHAT DSA DELIVERS TO RETAILERS
Increased Fresh
space in store
Page 22
Core range and
product differentiation
Upskilled
retail team
Improved value
proposition through
Price Match and
Private Label
HOW WE DELIVER DSA
Build excellent operations team
A true
partner in
the business
30 NEW
PEOPLE
SUPPORTING
IN-STORE
EXECUTION
Page 23
Expert in
‘whole-of-store’
Focused on
‘value-add’
KPIs on retailer
feedback
EXPERTISE-BASED & VALUE-ADD SYSTEM & TOOLS ACCELERATING
THE MOVE TO DIAMOND STATUS AND DSA PROGRAM ROLLOUT
AREA MANAGER
& RETAILER
SURVEYS
CAPTURING
Retail
Excellence
Compelling
Fresh
Visiting store
more often
Competitive Network
Pricing
Investment
Shopper
Led Ranging
RETAILERS
FEEDBACK
DELI
RANGE
GOOD
EVERYDAY
PRICES
GOOD
SPECIALS
MEAT
RANGE
STAFF WERE
FRIENDLY
BAKERY
RANGE
STAFF WERE
HELPFUL
PRODUCE
RANGE
POSITIVE
IMPACT ON
SHOPPER
PERCEPTION
DELI
QUALITY
STORE WAS BRIGHT/
WELCOMING
MEAT
QUALITY
Pre DSA
Post DSA
STORE
WAS CLEAN
BAKERY
QUALITY
DSA stores Pre DSA (survey Apr-Jun 2014) and
Post DSA (survey Apr-May 2015)
STORE EASY
TO NAVIGATE
PRODUCE
QUALITY
ITEMS WELL
STOCKED
Largest shifts post DSA were in:
Perceptions of
Fresh Range
Page 24
CHECKOUT
WAS EFFICIENT
Perceptions of
Store
Environment
Source: IGA / Supa IGA shopper experience research 2015
+6%
+5%
+5%
Overall
satisfaction
Recommendation
EDP
Perception
DSA RESULTS
REMAIN *
POSITIVE
Av. basket
size up
Av. basket
numbers up
20%
15%
16%
Retail Fresh
sales up
Total Retail
sales up
Total Warehouse
sales up
POSITIVE RESULTS FROM DSA SUSTAINED INTO FY16
Page 25
* Represents LFL sales growth achieved in DSA since launch to August 2015. Based on a sample of stores which had traded for 24+ months and had 4+ weeks trading post launch date with comparable prior period sales
PLANS INCLUDE A
FURTHER ~100 STORES
THIS FINANCIAL YEAR
FY15
52
Stores
Page 26
FY16
~100
Stores
FY17
ongoing
KEY AREAS OF FOCUS
Training
Academy
Funding models
to accelerate
retailer take up
Working with
MSOs to upgrade
larger stores
COMPELLING FRESH
PETER POKORNY
GM FRESH
Page 27
WHY IS COMPELLING FRESH IMPORTANT ?
FRESH IS A ~$38b MARKET
1
STRONG FRESH OFFER DRIVES
SHOPPERS, SALES AND PROFIT
FRESH NOW ~48%
OF ANNUAL
GROCERY SPEND
2
PRODUCE is a major
driver in deciding
where to shop
Fresh produce
growing at 7%
Metcash is significantly under-indexed in Fresh
Page 28 Source: 1. Grocery market MF&G Map Retail Oasis 2015
2. Nielsen Homescan data for Total Fresh products period ending MAT to 08/08/2015 (Copyright © 2015, Nielsen)
3. Nielsen Homescan data for Total Fresh products period ending MAT to June 2015 (Copyright © 2015, Nielsen)
3
METCASH FOCUS ON FRESH
Area of focus
Page 29
Progress
Capability
• Added strong retail experience to Fresh team
Quality
• Enhanced product specifications across all produce
categories
Suppliers
• Collaborative supplier planning with top 20 Fresh
suppliers
Supply chain
• Expanded cross-dock and DC capability to facilitate
supply of fresh ranges
Shopper-led way
• Good progress in key produce and meat categories
Support “Successful Independents”
• Delivering “end to end” solutions
• 119 Your Kitchen concepts implemented in 10 months
DELIVERING COMPELLING BASIC LINES
Competitors:
6 pack avocado
(Promo $5.99/ Off $6.99)
Competitors:
Poultry- Whole Birds
$3.99 kg EDLP
Competitors:
Berry Category
Fastest growing produce
category Hi/Lo pricing
IGA line:
5 pack avocado
(EDLP $5)
IGA line:
Poultry Whole Birds
$3.99 kg
IGA line:
Berry Category
Competitive pricing to match
Hi/Lo activity
IGA sales up ~30%
Page 30
IGA sales up ~45%
IGA sales up ~25%
Differentiating the
Fresh experience:
SPECIALTY
CHEESE
Page 31
Range expansion and merchandising
guidelines for field support team
Store support program – from training
and installation manuals to customer
information booklets and tasting events
Building momentum:
50 cheese shops activated in store in FY15
14 during the first three months of FY16
VALUE ADD FRESH:
A solution to support our network
Ready prepared range
95 products developed
15 pilot stores trialled in
December 2014
119 Your Kitchen concepts
installed since December 2014
Step change in Fresh
End-to-end solution
Targeting 200 stores in FY16
Page 32
FY2016
KEY FRESH FOCUS
Scale up
Fresh across
the network
Page 33
Accelerate take
up of new
Fresh concepts
Diamond Store
Accelerator
Program - a key
driver in lifting
Fresh sales
SUPPORTING SUCCESSFUL INDEPENDENTS
RUSSELL PARKER
EXECUTIVE GM RETAIL NETWORK
Page 34
SUPPORTING SUCCESSFUL INDEPENDENTS
TRAINING
ACADEMY
Page 35
IN-STORE
ANALYTICS
Offer team member career
development and reduce turnover
SUPPORTING
SUCCESSFUL
INDEPENDENTS
WE UNDERSTAND TRAINING
IS A CRUCIAL PART OF A
RETAILER’S BUSINESS
Consistently and effectively induct
all new employees
Improve Retail Excellence
and in-store compliance
Improve customer
engagement
Build capability to impact
commercial results
Receive new program and
information updates
Improving store performance
Page 36
DESIGNED AS A
ONE-STOP-SHOP
Metcash designed a range of learning opportunities to develop the skills
and expertise needed for the long term success of the network
FACE TO FACE &
ONLINE MODULES
Designed to build
leadership skills &
technical capabilities
Page 37
ONLINE LIBRARY
Resources, templates &
manuals supporting
compliance & competency
ACCREDITATION /
CAREER PATHWAY
Enable management &
team members to achieve
their full potential
TRAINING
ACADEMY
RETAILER
BENEFITS
Affordable, accessible, consistent,
relevant & specific to IGA standards,
operations & branding
A valuable tool for retailers to
achieve retail excellence
A valuable tool for the network to
adopt to deliver consistent standards
Rolled out to ~400 stores & ~4,000 people participating
Page 38
ANALYTICS –
LEVERAGING SCAN DATA
Comparative store
performance
Product recommendations
& range optimisation,
promotion opportunities
Gain quicker & deeper
insights on key
performance metrics
Foot traffic, basket, product
& promotion insights
Facilitates deeper
engagement with retailers
& creation of new value
Measure & optimise
network performance
Now over 1,200 stores supplying scan data
Page 39