I am considering WOW for the first time in a long time, not for...

I am considering WOW for the first time in a long time, not for punch the lights out SP appreciation but for boring returns that hopefully keep pace with inflation over time. This is not certain and I think I will give WOW a max of ~ 1-2% of my portfolio.

I was invested in WOW as it went through the major structural changes e.g. 'project refresh' etc. In this period WOW was continually improving its productivity, and growing sales and it seemed to overtake then increase its lead over Coles year after year. But WOW has done nothing of late to impress and I am looking at it only in the hope that WOW wakes up and shows some initiative instead of trying to fool people with marketing and customer capture tricks, which have been their only innovations of late.

I saw Aldi in Europe many years before it came to Australia and when Aldi arrived I knew they would take market share, although they took longer to get a foothold than I thought. I have the impression that Aldi has taken more from other smaller retailers than WOW/COL but Aldi is not finished with WOW/COL yet.

In Europe I saw many if not most shoppers go out of Aldi and into the upmarket equivalents of WOW/COL. Smart shoppers here have been doing the same, and splitting their spend ~ 80% - 90% to Aldi and 20% to 10% to WOW/COL. That is buy things of acceptable quality at Aldi and pickup anything special or on special from WOW/COL. Most people on HC probably don't need to do this, nor do I, but I put an extra $40 per week when I do which is 95% of the time.

Obviously, if I could, I would invest in Aldi over WOW or COL.

WOW and COL need to compete with Aldi or continue to lose market share to Aldi. A bold way to slow, perhaps even stop Aldi's inroads would be for WOW to put a 'Jetstar' section or store within or beside or in the same centre as each of their premium brand stores. Yes it would cannibalize their own sales but if they stopped the pathetic marketing tricks they have been trying to fool customers with, and instead genuinely offered an acceptable quality line of home brand in this format, it would also slow, perhaps even stop Aldi in its tracks. Note putting the home brands in the shelf area with the 100 other brands as they do is not the same thing.

Finally I note again that Intelligent Investor has had a buy on WOW which is a worry. A big drop like yesterday is not normally the end of it so WOW may be a buy soon.