Steven Cain gets a second chance to change Coles

Steven Cain is returning to the company that squeezed him out 14 years ago as its new chief executive.

Steven Cain returns to Coles after leaving the company 14 years ago.

Steven Cain is returning to the company that squeezed him out 14 years ago as its new chief executive, and investors will be hoping he lasts longer than the 14 months he did then.

Mr Cain had been running the supermarket’s food, liquor and fuel business during a period of so much disruption and dislocation that he was asked to leave.

If an executive’s ability to disrupt, challenge and push through innovation can be judged by the number of cynical or critical nicknames he earns from subordinates then Mr Cain must unleash massive upheaval wherever he lands.

During his stint at the old Coles Myer in 2003 and 2004, he was known as “Mr Ruthless”, “Mr Tough”, “a retail hard man” and ultimately when he was shown the door he was described more diplomatically by then Coles Myer boss John Fletcher as a “catalyst for change’’.

That’s probably because Mr Cain never seems happy just to accept the status quo and enjoys challenging inertia and old ways of doing things, so this brings him into conflict with his fellow executives and management as well as outside stakeholders.

The British retail veteran and chemical engineer joined the old Coles Myer conglomerate after being drafted from Britain where he forced through supermarket chain Asda’s strategy to expand its home brands offer.

The push into home brands made perfect sense — and has been followed by other supermarkets around the world including Coles and Woolworths — but it unsettled British suppliers as well as Asda’s management, which were comfortable with the traditions Asda had built up over decades.

Mr Cain brought that aggression with him to Coles Myer but he soon discovered an arthritic and stale retailer that pushed back against his strategies. At the time, he was Coles Myer’s second-highest paid executive after Mr Fletcher, earning $3 million in salary and bonuses.

He adopted a “crash through” approach, driving through innovations like merging the back offices of Coles and its stablemate supermarket brand Bi-Lo, shifting the liquor division headquarters to Melbourne from Sydney as well as cutting staff and forcing Coles to review and improve its fresh food offer.

It was the speed of change and the type of change that upset and angered staff, even though it might have been exactly what the struggling Coles business needed. Cain never won full support from his troops and was seen as alienating senior management.

Crucially, Mr Cain, who has a masters of chemical engineering degree from Imperial College London, didn’t win support from his own superiors either and all too soon Mr Fletcher escorted him out of the business.

Yesterday, Wesfarmers boss Rob Scott alluded to the inertia that once existed at Coles Myer that stymied Mr Cain’s first stint at the retailer, and suggested those roadblocks — in terms of culture and key senior executives — no longer existed.

“Steven did work for Coles for a couple of years and sought to try to implement a number of changes that we ultimately implemented when we (Wesfarmers) got control of it (Coles) but unfortunately Steven didn’t have the broader support of the team, most of whom were not part of the turnaround when we got control of the business,’’ Mr Scott said.

Mr Scott agreed that Mr Cain had been “basically” blocked in implementing much-needed innovation.

“Steven is someone that has incredible both local and international retail experience, he has been a separately listed-company CEO, which is important as Coles transitions to the new world,’’ Mr Scott added.

“He has all the attributes to be a fantastic leader of Coles.’’

Mr Cain is being snatched away from grocery wholesaler Metcash where he has been running its supermarkets group for two years, giving him responsibility for nearly $10 billion in sales to more than 2000 independent retailers under brands such as IGA and Supa IGA. And he seems to have made some headway in improving that business as it was caught in the crossfire between Coles and Woolworths as well as dealing with the rising power of Aldi.

Now he comes back to Coles as boss and no doubt will crash through any obstacles in his path.

The first 10 years under Wesfarmers saw disruption and upheaval for Coles. Anyone at the chain thinking now is the calm after the storm will be in for a rude shock when Mr Ruthless walks through the doors.