During the week, Woolworths announced that its CEO, Michael Luscombe, was stepping down in favour of some fresh blood in Grant O’Brien. The local media, desperate to get into a flurry over something other than Kevin Rudd telling the country what it already knew, began flailing wildly for an angle, settling on one of two narratives: that this may mean a ‘change in strategy’ for a company that is well entrenched in a loss-leading price war with an encroaching Coles and is committed to a long-term expansion into hardware with Lowe’s to take on Wesfarmers’ Bunnings, or that he’s a ‘shelf stacker’ made good.
Both of these narratives are flawed. The first, because it is wrong. The second, because it is boring. We here at Boganomics, however, have the real scoop. Woolworths has long had little need to actively court bogan bucks, primarily due to the epic incompetence of Coles Myer, but also because bogans had little other choice. While bogans will avoid ALDI upon learning of its kraut roots, the emergence of a functioning, competitive Coles, and Costco allowing the bogan to purchase cheap things in maxtreme quantities, means that it now needs to take the bogan seriously. If you consider this a change in strategy, then perhaps the media got it right.
Below is a confidential memo that was leaked to Boganomics from the highest level of the Woolworths executive – Chairman James Strong, clearly articulating the task ahead of the new CEO. This is not information that Woolworths wishes to become public.
To read the top-secret memo, head over to our weekly column at the Macrobusiness Superblog.