Kmart managing director Guy Russo with models.
Kmart managing director Guy Russo with models.

Kmart boss Guy Russo said he made two crucial decisions when he took on the job of reviving the ailing retailer in 2008.

He promised to "shut up and listen" to staff and made a commitment to himself that he would quit if he could not turn around the business within 30 days.

"If you don't get this right, get off the ship," Mr Russo told a packed WestBusiness' Leadership Matters breakfast in Perth today.

Mr Russo, a former McDonald's Australia boss, said he was stunned at the poor state he found Kmart in, with a confused strategy, 120,000 products and a mismatched pricing structure.

"We were trying to be Harrods and all the way down to the Reject Shop," Mr Russo said.

"That would be like McDonald's putting on a beautiful T-bone steak with avocado and artichokes.

"So I decided (when I took on the Kmart role) that I would shut up and listen. I wanted to learn what was broken.

"I went around to everyone at the Kmart family and I asked them what they thought was wrong.

"This was a business with a $4 billion turnover and making zero profit.

"And I decided in the first 30 days if you don't get this right, get off the ship."

Mr Russo, who has since transformed Kmart into Australia's best-performing retailer and the envy of Wesfarmers' other stable mate, the embattled Target chain, said he was also not afraid to copy other successful leaders.

He said he tried in vain to gain access to US giant Walmart's senior executive but gained valuable insights from the head of British discount chain Primark as well as Wesfarmers' consultant Archie Norman, who was credited with turning out UK chain Asda.

"Don't feel bad about stealing something from someone else," he said.

Mr Russo said it soon became apparent that he needed to drastically slash Kmart's product range, reduce suppliers by cutting out the middleman and dealing directly with manufacturers in countries such as China, and getting rid of a pricing system that lured customers in with discount offers that sometimes meant Kmart was selling products at below cost.

Mr Russo also said he defied convention by choosing his Kmart leadership team from existing employees, rather than parachuting in a new level of executives.

"Selecting the team was very critical," he said.

"(Traditionally) the first thing to do is shoot the leadership team but the CEO was already gone.

"I selected the team from the office, there were clearly a couple of people who left but that was only two to three. The rest of the team came from within."

The West Australian

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