for growth in sales and profitability as Aldi, Costco, Coles and Woolworths erode its market share. In a bid to refocus on its core food and liquor business, Metcash has sold its automotive division to the listed Burson Group and is attempting to re-invest in lower pricing to improve its competitiveness against rival grocery retailers.   Metcash has appointed former Coles supermarkets MD, Steven Cain, as head of its supermarket business. He replaces Fergus Collins, who worked with Metcash for 13 years and was most recently its supermarkets CEO.   Cain has been advising Metcash on strategies to reinvigorate the business, which is now facing increased competition in Western Australia and South Australia, where Aldi is rolling out stores and the prospect of further cherry picking of independent supermarkets by the chains.   The wholesaler has also appointed former Woolworth executive, Mark Hewlett, as executive GM for new channels. Hewlett was responsible for the operations of the Thomas Dux chain that Woolworths is now looking to divest and, for the past three years, had a business development role in the convenience stores that formed part of Woolworths fuel business.   Metcash is a major supplier to the convenience store sector, having snared a supply contract with 7-Eleven in 2005 and extending it to include the Mobil service stations acquired by 7-Eleven in 2011 and BP, since 2013.   Metcash has around 17 per cent of the convenience store market but has previously indicated it wants to build that share to around 30 per cent. Hewlett’s appointment is expected to underpin further development of business opportunities in convenience stores and smaller grocery outlets.   Is Cain able? Cain’s appointment has been welcomed by financial analysts, who have been concerned about low sales growth and declining margins and earnings for the wholesaler. But there are question marks about whether or not he will be a good fit in an executive position with Metcash. Cain’s tenure at Coles was a short 12 months, with his management style rankling other executives. However, it’s worth noting that there was certainly a need to shake up that business back in the period of 2003 to 2005.   He had been recruited on the strength of an impressive rise through management ranks at the ASDA supermarket chain in the United Kingdom, although he joined Coles from a private business venture that he co-founded.   Cain has been credited as being a key player in the turnaround of ASDA but, while he held roles as group marketing director and store development director, he was arguably not the most important executive in the discount chain.   Most of the credit for the ASDA turnaround is usually subscribed to Archie Norman, who led a management that included Ian McLeod, who was recruited by Wesfarmers as MD for Coles food and liquor business in 2008.   After leaving Coles, Cain remained in Australia and joined private equity firm, Pacific Equity Partners, which had two failed retail investments, REDgroup Retail – which included the Borders, Angus & Robertson and Whitcoulls book chains – and Godfreys, the vacuum cleaner business.   Cain was chairman of REDgroup when it was placed in the hands of receivers, while PEP exited its investment in Godfreys in a deal that saw financiers swap debt for equity.   Cain has had a number of consulting roles and is regarded as strong in strategic planning. However, his track record in operational management is coloured by the short stint at Coles, notwithstanding improved financial results under his leadership and the subsequent PEP misadventures. But he was not in a day-to-day operational role in either the REDgroup chains or Godfreys. Leadership style could be a key factor when Cain starts with Metcash on August 1.   A strategic review of the wholesaler’s business has identified problem areas that need to be addressed to stem further declines in margins, earnings, market share and, potentially in the face of increased competition, grocery sales.   Cain therefore has a roadmap, extensive international experience and an understanding of the discount supermarket model, as well as the workings of the major chains. But at Metcash he will have to work with more than 1400 ‘managing directors’ (in other words, the independent supermarket owners).   Disciplines are obviously harder to enforce in the independent sector than in a chain and there are some very experienced and influential independent retailers Cain will need to duchess and convince about the merits of any changes he wants to implement.   Ian Morrice, Metcash CEO, said Cain and Hewlett are very strong additions to the wholesaler’s executive team and, “will considerably strengthen our retail knowledge and capability”.   Cain has indicated that he is pleased to be returning to an operational role in supermarkets and that he believes the timing is good, with Metcash having developed what it calls the ‘diamond transformation program’ that aims to rejuvenate underperforming stores; revitalise the black and gold housebrand ranges; develop fresh food sales further; and to optimise the supply chain. Metcash has also launched a price match strategy – an initiative that appears to have had some cut through with consumers but has significantly impacted on margins and earnings in the short term.   The price match program has now been implemented in more than 1100 stores, and 100 stores are scheduled to be redeveloped after the completion of 70 store upgrades in the 2015 financial year.   Time critical transformation The transformation program is time critical for Metcash with Aldi’s expansion and with evidence that another German discounter, Lidl, is talking to governments and evaluating potential sites for stores.   While Lidl stated in June that it had no current plans to launch in Australia, the chain has been linked with sites in NSW and has had discussions about opportunities with the Victorian State Government.   Lidl has had trademarks for products and its own corporate identification registered in Australia for some years.   Announcing the 2015 financial year results, Morrice noted that Metcash and its IGA supermarkets were facing more intense retail competition, particularly with the expansion of the discounters, a deflationary environment, and changing consumer spending patterns that are moving to fresh food and private label products.   Outlining the agenda for Cain, Morrice said Metcash is focused this year on competitive pricing, improved retail execution and marketing competencies and developing fresh food ranges.   Morrice said the chain wants to develop a shopper-led approach in its operations. Annual sales for Metcash supermarkets dipped 0.2 per cent in the 2015 financial year, to $7.65 billion, compared with $7.66 billion in the previous year. Convenience store sales were up by 11.3 per cent in FY2015 to $1.56 billion, in part, because of the BP supply contract.   Earnings before interest and tax for the year in the supermarkets and convenience business plunged by 26.1 per cent to $216.8 million, while the wholesaler reported a net loss for FY2015 of $384.2 million after writedowns totalling $640 million its accounts.