The loss of Peter Scott as effective head of Coles may well be the tipping point in the battle to save Coles from the barbarians.

As a stand alone event, the departure of any senior member of the Coles team, while not good news, need not be seen as a disaster. However, following the loss of other members of the leadership group including Steven Cain, Hani Zayadi and Richard Broug, Scott’s departure is the most recent link in a chain of senior exits that will have a highly destabilising effect — at a very critical time.

Scott’s replacement is Mick McMahon. McMahon arrived at Coles in March 2005 to head Coles Express. He was an ideal candidate for that gig as his background included 18 years with Shell in senior retail roles in their fuel and convenience store businesses. More recently he was appointed head of marketing at Coles.

Although McMahon is a talented manager, this will be a huge leap for him. Supermarkets are vastly more complex offers and a much larger businesses than convenience stores.

Petrol, smokes and ice are not grocery. Running marketing is not running merchandise. And McMahon is now the effective head of the 60% of the business by which Coles will succeed or fail.

Coles are deep into re-engineering the business — a process in which McMahon has had little involvement or understanding. Senior sources within the company are saying that they will soon tire of explaining the nuances of the business to the newcomer.

His appointment has further damaged the already sagging morale at the senior level and heightened the feeling of impending doom. We have been contacted by two people with mission critical involvement in the transformation who now want out.  Enough is enough.

McMahon is acting in the role while a search is conducted for a permanent replacement. If Coles finds another grocer to fill the role, there will be yet another learning curve as the appointee comes up to speed.

Without any hiccups or unexpected hurdles, the challenge Allert and Fletcher set themselves when sending KKR away was daunting enough — and possibly unachievable. They were greeted with scepticism by sections of the market and the retail industry.

Did the challenge just become impossible? Should the sceptics now become cynics?

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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