The move by grocery wholesaler Metcash to sack 478 staff and close 15 Campbells Cash & Carry outlets signals a “bleak” future for corner stores and milk bars according to retail experts.
Metcash’s closure and redundancy plans reflect the reality of consumers increasingly bypassing the corner shops that the business supplies in favour of the price advantage of supermarkets and the convenience of petrol stations.
Chief executive Andrew Reitzer told The Australian that Metcash had seen an “accelerating decline” of traditional neighbourhood grocery stores, whose convenience was no longer enough for customers to ignore their higher prices.
“The unbranded corner store, once they join a brand like Foodworks or 7-Eleven or IGA Express, then they’re part of a buying group and they get lower prices and deals, but a standalone corner store I don’t think has a future,” he said.
“Unfortunately, we just can’t afford the infrastructure to service them.”
Metcash will close 15 Campbells outlets in regional areas, leaving 18 metropolitan outlets to concentrate on servicing customers such as the 7-Eleven chain, which Mr Reitzer said was doing “exceptionally well”.
Sean Sands, research director at the Australian Centre for Retail Studies told SmartCompany Metcash’s move signalled a broader malaise in the convenience store sector.
“I think price has been a key factor for the last two years and convenience stores broadly are feeling the squeeze,” says Sands.
“They are competing with the convenience offerings like 7-Elevens and service stations and the future of the mom and pop corner store is a little bit bleak.”
Sands says it is no longer enough to just be a corner store and he expected to see Australia stores following overseas trends where corner stores are offering additional range such as fresh fruit and vegetables, ready prepared meals and sandwiches.
“Basically convenience offerings that don’t just focus on higher prices just for the sake of the location,” says Sands.
However, Sands acknowledges that this trend could be difficult to replicate in Australia because of supply chain difficulties resulting from Australia’s size.
Sands warns corner stores also face increased competition from the supermarket giants.
“Supermarkets increasingly see themselves as competing in the convenience space,” says Sands.
“Just the product offerings themselves show this, such as selling cold drinks rather than just drinks from the shelves.
“[The supermarkets] are also reducing their store size and opening dedicated convenience offerings such as Coles Express.
“The convenience market is a tough market.”
Metcash was unable to respond to our request for comment in time for publication.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
