Retailer fills the gap left by supermarkets

BLAIR SPEEDY
April 26, 2013
The Australian

ONLINE retailer GroceryRun is reporting a surge in sales as shoppers seek out products the major supermarkets have dropped in favour of in-house brands.

General manager Kalman Polak said sales were growing about 38 per cent ahead of last year, thanks to an influx of major suppliers coming on board to sell through the site.

“In the last six months we’ve picked up Kraft, Nestle, Purina pet food, Mission Foods, Cussons, Suisse, Musashi and CSR sugar,” Mr Polak said.

He said the addition of new suppliers was helping the company attract even more, as manufacturers didn’t want to forgo a lucrative sales channel.

“Suppliers are telling us that a year ago they didn’t think the site was for them, but now they see their competitors on here they feel they’re missing out,” he said.

GroceryRun is a subsidiary of fast-growing online retail player Catch of The Day and grew out of a regular monthly sale of grocery items on the main Catch website. The site now delivers sales revenue of almost $1 million a week, with an average sale of $80 a transaction.

Mr Polak said suppliers also came to GroceryRun to sell brands that had been taken off the shelves of the leading supermarket operators.

“They’re not getting enough out of Coles and Woolies. They’ve deleted too many SKUs (stock-keeping units) and they can’t make any money out of the supermarkets because they keep crunching the suppliers’ numbers down,” Mr Polak said.

“They come to us with stock they expected they’d be able to sell on the shelves of Coles or Woolies, but now they can’t get rid of it. And if we sell it for them they’ll often keep producing it for us.”

Supermarket chain Coles cut about 7000 individual product lines from its portfolio during the two years to June last year, reducing its range by 11 per cent to about 55,000 stock-keeping units. At the same time, both Coles and Woolworths have been increasing the shelf space devoted to in-house brands or “private label” products, which generally sell for less than name brands but deliver higher margins to the retailer.

The Australian Competition & Consumer Commission is investigating suppliers’ claims that the supermarket chains have abused their market power in dealing with suppliers, including threats to replace their products with private-label goods unless prices are cut significantly.

Private-label products account for about 21 per cent of sales revenue at Coles, while Woolies is slightly behind on 18 per cent.

Both are also pursuing growth in online shopping.