Investors are betting on more declines for Metcash's share price as many doubt whether the struggling grocery wholesaler can survive the onslaught from discount retailer Aldi.
The IGA supplier is the most shorted stock on the Australian share market for 2015 so far, which means it has the most investors backing its share price to fall further.
Some analysts are even predicting Metcash, whose shares have slid by about 40 per cent since January, will become extinct within a decade.
Amid all the negativity, Metcash will host an investors day on Tuesday to try to convince the market that it has a substantial turnaround plan.
Morningstar analyst Gareth James says the wholesaler will have to be creative to remain relevant in the changing supermarket landscape.
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The company supplies independent stores, including Supa IGAs and Foodland, which are set to lose more market share to Aldi as the German discounter expands into South Australia and West Australia.
"Aldi can sell products cheaper than other supermarkets," Mr James said.
"It will win market share wherever it expands into and most of that market share will come from the independents.
"There is a huge risk that Metcash is going to be squeezed and it will be the key loser as a result of the increasing competition."
Aldi's successful low-cost model has also driven a fresh price war with the major supermarkets.
As a result, IGA outlets have been forced to price match Coles and Woolworths on as many products as possible, cutting further into profit margins.
Mr James said some of the independent stores were successfully branching out to other suppliers and catering for niche markets including halal and kosher products.
"Even if the store owner can tailor their store to the niche market it is operating in, it doesn't change the fact that it may source products from someone other than Metcash and that is another threat to Metcash's business," he said.
Metcash, which supplies 2,400 independent supermarkets, most of which are IGAs, posted a $384 million loss in the 12 months to April, compared to a $169.2 million profit in 2013/14.
It has sold its automotive business to help raise funds to turn around its ailing food and grocery business.
In July, it appointed former Coles managing director Steven Cain to head its core IGA business, while Mark Hewlett was recruited from Woolworths to lead the company's search for new business.
