The IGA chain of supermarkets has signed a deal with its principal supplier and owner of the IGA brand Metcash to share the proceeds of growth and major expansion projects.
The extra profit of between $10-$20 million through the expansion, refurbishments of stores, brand compliance and other improvements over the next three years are to be shared equally between the two parties.
“This is a historic deal for independent supermarkets in Australia, where we will share the proceeds of IGA’s continued expansion across Australia with our supplier for the first time,” said IGA national board chairman Mick Daly.
“We are delighted that Metcash has confirmed its position as the champion of the independent retailer by striking this historic agreement with IGA, whose network we continue to expand despite competition from the national chains”, he added.
The agreement is part of a two-year, multi-million dollar project called Lion by IGA and Metcash to identify and generate greater operational efficiencies, technology upgrades, brand compliance as well as create growth targets.
As part of the project, IGA will develop more than 225 new stores by 2012, with 43 opened last financial year and a further 60 new openings expected in 2009-2010.
“We have also targeted $110 million in savings over the period that can be generated through greater operational efficiencies in stores and within our distribution system,” said Metcash CEO Andrew Reitzer.
“We are working very closely with our retailers to achieve aggressive growth targets during tough times and believe our interests are perfectly aligned with IGA owners, who should share the rewards of our market-leading supply system”, he added.
Reitzer said that the new scheme would encourage other independent retailers to join the IGA banner.