Leadership Lessons: Metcash's saviour

Every month Hashi Syedain talks to a business leader about their personal management issues.

by Hashi Syedain, World Business
Last Updated: 23 Jul 2013

Andrew Reitzer transformed Metcash Trading from an ailing family-owned food distribution company into the third force in Australian food retailing, and one of the country's best performing stocks. Latest half-year results show sales up 34% to A$4.6 billion ($3.8 billion) and profits up 36% to A$76 million. Originally from South Africa, Reitzer moved to Australia on three days' notice in 1998, when South Africa's Metro Cash and Carry, where he had worked for 20 years, bought food distributor Davids in Australia, later renamed Metcash, and restructured the huge array of supermarket names under the IGA banner. Metcash's motto says it is 'The Champion of the Independent Retailer'.

Number three in the market isn't usually something to be proud of, is it?

They teach you in business school that unless you can be number one or two, you're doomed to failure. But one of the things I've learned is if you're different, you can have a great business as a number three. One and two - Woolworths and Coles - do the same thing. It's a race for size and cost efficiency. Being number three - we have about 18% market share against their 75% - you have to have a different model.

We are the champion of the independent retailer. There are about 1,300 independent stores under our IGA (Independent Grocers Alliance) banner and we have opportunities to pick up stores and to grow our store sales. But if we wanted to buy the number two, we couldn't do that for competition reasons.

Has spending your whole career with one company been a disadvantage?

It's a major advantage in terms of industry knowledge that I've spent my whole career in food distribution. Although it's been the same company, I've had a different job every few years. Even as CEO of Metcash, I'm doing a different job now than when I first started. Then we had one dominant shareholder and it was all about getting fit to compete, putting systems and capability in place. It was very internally focused. Today, we have no dominant shareholder; we're in a leadership position and looking for growth.

Having been in this industry a long time has also helped me make good decisions - for example, internet shopping. With internet shopping, it's hard to hold the customer because in life stuff happens. People go on holiday and come home to an empty cupboard. They're not going to go to the computer, they're going to run to the supermarket. Second, the customer is not prepared to pay more for the service, and you've got higher costs because you need to pick the items and deliver them. That's why we didn't go down that route.

What significant mistakes will you admit to?

One of the ways I measure the culture of the organisation is how long it takes for bad news to reach me. When good things happen, people run into your office immediately to tell you. A few years ago we went on a drive to increase the sales of general merchandise in our stores - pots and pans, household goods. When we started, we bought stuff that didn't sell and the way we approached it was all wrong. If I buy six weeks' worth of Heinz beans instead of two weeks, it's not a big deal, because the beans will sell in the end. That's not the case with general merchandise. We stopped and regrouped, and now we sell those lines very successfully. But it took a few weeks longer for the bad news to reach me than I would have liked.

Is it true that you agreed to move to Australia without consulting your wife?

When Metro was buying Davids, I was one of the people who put my hand up and said I'd be interested in moving there. When I discussed it with my wife, we thought there would be an opportunity to go over and have a look first. But the offer came while we were on holiday in Kwazulu-Natal. They asked if I would take it and said they wanted me there in three days. My wife was outside on one of those endless South African beaches that go on for miles and I couldn't find her. So I just accepted the job. I don't think I'd do that again, though.

So you're not afraid to make quick decisions?

Sometimes you have so much information that you can delay too much. I always talk about a bias for action. An example is when I first arrived in Australia. We had 29 store brands and as we travelled round the country, each person would explain why their brand was the best. Two or three weeks in, we thought, we could spend a very long time doing this and chances are we won't have a business left by then.

So we just decided, there's going to be one new brand, IGA, and if you disagree with that, leave. No one did because they were convinced by the logic, and it proved to be one of the best decisions we made.

- Leadership lessons is sponsored by DDI.

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