Coles transformation to take five years

Posted by Daniel Palmer on 26th May 2008

Incoming Coles Chief Executive, Ian McLeod, has outlined his plans for the company in a meeting with journalists on Friday.

Mr McLeod, a Scottish retailer with ten years experience at UK supermarket chain Asda, believes it could take five years to turnaround the fortunes with a change in culture to take time. “There’s probably a cultural shift within the organisation that will be required, particularly in relation to the emphasis placed on stores,” he said. “I don’t think there’s going to be an individual day when people are going to suddenly see a blinding light of improvement. I think that it’s going to be a gradual transition over time.”

Mr McLeod, who has not been involved with food retail since leaving Asda’s German operations in 2001, said he had spent a few months travelling to retail chains in North America and Europe this year in order to ascertain the latest trends in the supermarket industry. He also spent time visiting Coles outlets in Australia and his belief in a medium-term turnaround comes following his revelations that some of the stores “horrified” him. “There were one or two that horrified me, in truth,” he admitted. “I’m under no illusion as to the scale of challenge that we face, but I’m confident that we can rise to that challenge. This is a three to five-year transformation program, and there aren’t really any magic bullets — it’s going to be hard work and effort,” he concluded.
Coles, who has seen their market share gradually whittled away by market leader Woolworths, is looking to overseas experts to improve their flagging fortunes. The Asda influence is now particularly strong with announcements that former Asda colleagues, Joe Blundell and Gavin Parker, will join Mr McLeod’s team in the positions of marketing director and store format development manager respectively. Further, Archie Norman, former boss of Asda, has been hired as a consultant by Wesfarmers to assist with the Coles turnaround and was reportedly instrumental in the hiring of Mr McLeod.

The announcements of the new managers and the introduction of the new CEO is part of a big week for Coles, with their submission to the ACCC’s price inquiry due to be discussed at a hearing in Melbourne today.