Cleaning house

Beyond that Scott has some remaining portfolio issues to consider. Does he keep Officeworks? Wesfarmers wanted to float it on the sharemarket last year but pulled the deal when it couldn’t achieve its desired valuation of $1.5 billion in a difficult environment for initial public offerings.

It’s a very good business, growing solidly and consistently, albeit with the shadow of Amazon hanging over it. But if Officeworks was considered non-central to the Wesfarmers’ portfolio a year ago, however, it seems reasonable to assume there will be a continuing discussion about its future.

The more difficult question is what to do about Target. While Target chief Guy Russo has stopped the bleeding – the chain is now modestly profitable after he carved into its cost base – its sales continue to shrink and, in a much smaller Wesfarmers post-Coles, its performance will have a greater impact on group returns.

The urgency with which Scott has started his tenure might suggest that he will demand quicker and more structural change to the brand, now grouped with the successful Kmart within a department store division.

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If Scott were prepared to take a hit on the leases of Target's less attractive locations (and he’s shown a desire to ‘’clean house’’ at the outset of his tenure), and locations where a discount-driven approach might be more suitable were rebranded into Kmart stores, Target might emerge a smaller but more profitable business.

The alternative, of course, would be to sell the brand to someone who believed they could make a better fist of turning it around. Private equity is the obvious candidate.

While Target remains a problem child, Wesfarmers is very enthusiastic about the "flybuys" loyalty business and plans to retain a substantial interest in it beyond the Coles demerger.

The group plans to hire data scientists and engineers for an advanced analytics centre – which it says will improve its earnings from the outset – whose insights will be deployed across the group.

It was evident in all the presentations that Wesfarmers is embracing the digital economy. Even Bunnings, once sceptical that digital channels were relevant to its offer, is now enthusiastic about the potential to create an e-commerce platform that capitalises on its strong online engagement with customers as well as its dominant store network.

Bunnings, Coles push online

Bunnings will, post-Coles, become even more critical to Wesfarmers’ performance and value. It is continuing its bricks and mortar store expansion while also continuing to redefine its markets and expand its range of products and, increasingly, services.

Given its unchallenged dominance after the demise of Woolworths' Masters start-up, there’s no reason to believe Bunnings’ historically stellar performance won’t continue.

Coles, awaiting new CEO Steven Cain’s arrival, is claiming market share gains from a better fresh food offer, investment in service and improved customer and staff satisfaction levels. It is also pushing strongly into online, with double-digit growth in sales.

While both Coles and Woolworths continue to lower prices, the intensity of the price war between the supermarket chains has abated as Woolworths has stabilised its sales and market share. After its spin-off, Coles will presumably want to avoid re-igniting it.

It does, however, see opportunity in its "fresh" departments and from its house brands and indirectly made the point that both Coles and Woolworths can grow in a market where independents still have a 13 per cent share of the market that they can contest.