Retail expert Rob Lake writes:



In August 2001, the newly
appointed CEO of Coles Myer said he had visited a
supermarket but once in his life. The
market was unconcerned by this as the
share price rose 14% on the news of his appointment. Might we now be seeing a result of his lack of
familiarity with shop floor retail? CML
seems to be losing touch with its customers. This is “Retailing
101” stuff. They appear to have really lost their
way.

Has anyone had a look at the culture of the businesses within the
group? How people are led does make a difference. And yet there seems to be no
feeling of shared common purpose. There is no questioning of the
people who are closest to the customers. Few of their staff are willing
to speak up.

My company Orex recently had some dealings with
a consultant working on a software and systems upgrade project within CML. Whenever anything was suggested, the first
move from the CML people was to consider the politics and cover their
posterior. No-one was willing to take a risk. Questioning the status quo in the search for
a better way seems unknown. They just kept
saying “that’s not how we’ve always done it”. One definition of insanity
involves continuing to do the same thing while expecting a different
outcome.

Someone else we have spoken
to has worked at the top end of CML addressing the leadership issues. The consultant feels that Fletcher is a good
leader struggling to drive a better culture downwards. The company has such a long history and
in-built inertia that the task might be overwhelming except in the context of a
massive crisis resulting in a paradigm
shift.

It is now clear that Woolworths is on track to become the first
Australian retailer to post a billion dollar profit. As Stephen Mayne
wrote yesterday, they have now opened a considerable performance gap in
shareholder value, sales, profitability and cost of operations ahead of
Coles Myer. The result also appears to be a pay off for the extension
of Roger Corbett’s tenure until this year. His shoes will take some filling.

Woolworths
seems likely to continue this growth,
passing cost savings on to customers and a rising share
price to investors. Anyone want my wife’s
762 CML shares?