13/11/2007 - 22:00

Independents a threat to Coles

13/11/2007 - 22:00

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IGA Supermarkets could potentially overtake Coles Supermarkets as Western Australia’s second biggest supermarket chain within 12 months as it continues to expand its operations throughout the state.

IGA Supermarkets could potentially overtake Coles Supermarkets as Western Australia’s second biggest supermarket chain within 12 months as it continues to expand its operations throughout the state.

The Metcash Ltd-backed independent supermarket chain has plans for 14 new stores that could open within the next 12 months.

IGA Distribution WA general manager Silvestro Morabito said that, assuming Coles did not open any more stores in WA in the next 12 months, IGA would become WA’s second biggest chain by opening the additional 14 stores.

But he cautioned that all 14 stores might not open within 12 months due to labour shortages.

“Unfortunately, because of the booming economy there are delays at a council level, and getting the right construction contractors can be difficult,” Mr Morabito said.

Coles will officially be owned by Wesfarmers Ltd from next week, with the Perth-based conglomerate stressing it would take some time to implement changes as it looks to turn around the retailer’s poor performance.

According to Metcash figures, Coles accounts for 32.8 per cent share of WA’s supermarket sector. IGA is slightly lower with a 31.5 per cent stake, while Woolworths is out in front 35.7 per cent of the market.

Mr Morabito added that IGA Distribution, a division of Metcash, had more IGA project sites on its books than it had retailers to own and operate them.

Of the 14 stores Metcash plans to develop as IGA supermarkets, five will be bigger format Supa IGA stores, scattered throughout established and emerging areas.

One store will open in Armadale and another in Ellenbrook, while Mr Morabito added the group was also in discussions to take over other existing independent operators.

Mr Morabito said each store would be 1,500 square metres or more in size.

He said there were plans to open nine of its smaller IGA stores, which would be a mix of brand new sites or smaller stores, not under the IGA banner, upgrading their business and moving into its network.

Metcash chief executive Andrew Reitzer, who was in Perth last week to launch the Food Industry Association of WA, said WA was the biggest growth market for the company.

He said WA was growing in the double digits compared with single digit growth on the eastern seaboard.

There are 209 IGA supermarkets in WA. The bulk of these (159) are IGA stores, with the remainder comprising Supa IGA, Progressive Supa IGA, and IGA Xpress stores

The IGA brand is owned by Australian Securities Exchange-listed Metcash, which operates a national distribution business that supplies the bulk of goods sold by the independently owned and operated IGA stores.

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