Maclean IGA Supermarket.
Maclean IGA Supermarket.

Government crackdown won't slow IGA supermarket build

WORK on Maclean's IGA supermarket will begin on schedule on July 17, despite threats of a government crackdown on the company's supply chain.

Ritchies IGA Queensland manager Peter Lee said the issues were with Metcash and the Federal Government and would have no impact on the Maclean supermarket build.

"We'll be in Maclean on July17 at 10.30am to turn the first sod,” Mr Lee said.

He acknowledged there were concerns about the Grocery Code of Conduct, a set of rules most of the major supermarket chains signed up to voluntarily several years ago.

Except for Metcash.

A government review into the effectiveness of the code has just been released and the draft report from it contains some damaging information about Metcash's treatment of farmers and other suppliers.

"The review received complaints from suppliers concerning the conduct of Metcash, including issues relating to unilateral demands, forensic accounting practices to offsetting amounts owed without the supplier's consent, failure to comply with promotional terms, and requiring payments above reasonable costs to conduct study tours,” the draft report says.

"The review identified ongoing issues between the wholesaler and its suppliers. Metcash should become a signatory to the Grocery Code.”

Mr Lee said Metcash supplied the majority of IGA's groceries but would be able to continue in that role even if government regulations changed.

But some retail analysts are predicting bigger issues for IGA and Metcash as competitors Woolworths, Coles, Aldi and Costco expand and German newcomer Kaufland comes on the scene.

Writing for news.com.au, Jason Murphy said Metcash and IGA need a shake-up to keep up with the competition.

"Everyone would agree that Metcash should treat suppliers fairly,” he wrote this week.

"But IGAs already struggle to compete on price with the big chains.

"Forcing Metcash to sign up to the code might make its groceries even pricier, and accelerate the decline of the humble IGA.”

The reviewers had similar views of Metcash's future and its capacity to adapt to a changed regulatory system.

"With increased price competition, independent retailers and Metcash have faced a steady decline in their turnover over the past five years,” the review said.

"Questions have also been raised about whether its traditional wholesale model remains suitable for adapting to changes in consumer habits.”

Mr Lee said that if the supermarket build all went to plan, they were hoping for an April 2019 opening date for the new Maclean IGA.