Suppliers of value products to the CE Channel could be looking to a big uplift in sales after Metcash boss Doug Jones claimed that consumers are looking for value when filling their supermarket baskets and that private label is taking off.
Distributors such as Tempo, Laser Corporation, Cellnet and Brisbane base The Crest Company, are already major suppliers to the likes of Big W, Aldi, and the major CE and appliance retailers including JB Hi Fi, Harvey Norman, and The Good Guys.
Doug Jones claims that consumers are opting for private label groceries, this appears to also be the case at mass retailers with Big W and JB Hi Fi witnessing demand for house brand products.
ChannelNews understands that Aldi have recently moved to rationalise their specials with more value products over more expensive big item products such as large TVs.
Jones claims that the impact of cost-of-living pressures and increased focus on value had seen a flat average ‘basket size’ for his supermarkets over the last year.
Unveiling Metcash’s annual financial results, he said there has been a noticeable change in some shoppers’ behaviour from early calendar 2023 to focus more on ‘value’ items, although this was not a dominant trend in the Metcash flagship food and supermarkets pillar.
Several major retailers such as JB Hi Fi are still witnessing “strong” demand for premium products along for replacement products such as notebooks, smartphones, and appliances.
The two biggest supermarket chains Woolworths and Coles have also reported a spike in private label groceries.
Metcash which wholesales to supermarkets such as IGA, Foodland and Ritchies delivered earnings growth of 3.8 per cent.
Retail like for like sales growth in the IGA network was 0.9 per cent. A record number of 39 new stores were opened in the year.
Food EBIT increased 3.8 per cent on a normalised basis to $204m reflecting the strong trading performance, which more than offset the impact of additional costs, particularly labour and freight. The Food EBIT margin was maintained at 2.1 per cent despite these additional costs.
Hardware, led by its Mitre 10 banner, built on the exceptional earnings growth over the past two years, delivering a further 16.8 per cent increase in earnings. The strong growth reflects robust underlying demand and the increased contribution from majority-owned company and joint venture stores in its independent hardware group and its Total Tools retail stores.
The liquor pillar delivered a further 8.9 per cent increase in earnings, buoyed by ongoing strong sales to retail customers and continuation of the recovery in on-premises sales, which were cycling the adverse impact of Covid-related trading restrictions.
Solid sales growth has continued in the first seven weeks of fiscal 2024 with all pillars continuing to perform well. Group sales increased 2.3 per cent, with the rate of growth in food similar, and hardware up, compared to the second half of 2023.
