Metcash's plan to lend as much as $25 million a year to IGA retailers to fund store refurbishments is under a cloud as the outlook for independent retailers deteriorates amid increasing competition from Aldi and the major supermarket chains.

As part of its five-year turnaround plan, Metcash plans to help scores of IGA retailers renovate their stores to improve the shopping experience and create floor space for high-growth, high-margin categories such as fruit and vegetables, meat, dairy products and ready-made meals.