👉 Background: Wesfarmers is one of the largest conglomerates and oldest businesses in Australia. They're the owner of Bunnings, Kmart, Officeworks... it even has a fertiliser and chemicals division.

👉 What happened: At their annual strategy day, Wesfarmers' CEO said that the "honeymoon is over" after the past few years of government stimulus and low-low interest rates.

👉 What else: The CEO claims that Wesfarmers has been preparing for this scenario for quite a while. They have kept their prices low, even during the consumer spending spree. And this is all part of a long game to ensure they remain in good shape for the long term.

What's the key learning?

💡Managing a retail business in a quickly changing economy requires a long-term outlook.

💡Retail businesses like Wesfarmers often rely on a high volume of sales with lower profit margins per item sold. So over the past few years, when Aussies had more disposable income and savings, Kmart and Bunnings probably could have raised their prices a lot more.

💡But as the economy has shifted… and Aussies are tightening their purses, the Wesfarmers' value model tends to work well. And while its CEO reckons they may have left some ‘margin’ on the table during COVID, they’re hoping to reap the rewards now.

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