Woolworths' decision to reintroduce Australia Day merchandise in 2025 confirms the concerns many raised last year after it removed these products in 2024, citing declining demand and cultural sensitivities. I warned that it risked entangling business with politics. Now, with this reversal, it's clear those warnings were justified.

This situation highlights important lessons for businesses moving forward.

The Fallout from 2024

As soon as Woolworths announced it would not be selling Australia Day merchandise in 2024, the trouble started. People began voicing their dissatisfaction on social media. Then, Opposition Leader Peter Dutton called for a boycott. Woolworths' attempt to frame the decision as a response to "declining demand" and "broader discussions" about January 26 did not dampen the controversy.

Financial and Reputational Damage

Immediately, the financial impact was evident, reflected in customers voting with their wallets. The reputational damage was equally severe, with Woolworths labelled "unAustralian" by critics and its employees facing abuse from frustrated shoppers.

The CEO's Missteps

Then, the handling of the situation by CEO Brad Banducci's comments about the decision being "commercial" rather than political rang hollow. By stepping into the divisive debate of Australia Day, Woolworths blurred the line between commercial decisions and political statements.

2025: A Course Correction That Proves My Point

Fast-forward to now, and Woolworths has reversed its stance. The retailer said it will now sell Australia Day merchandise on a unique stand in its stores on Australia Day, again including Australian-made flags and themed products available in stores and online. A spokesperson admitted that last year's decision was a mistake, stating, "We listened and recognised that many customers and teams wanted us to do more to help them celebrate the day."

What Changed?

Customer Feedback

Woolworths acknowledged that many customers traditionally wanted to celebrate Australia Day, pushing the company to rethink its approach.

Focus on Local Products

By selling Australian-made flags instead of imported ones, Woolworths has aligned its offerings with patriotic sentiment while supporting local manufacturing.

Neutral Framing

This time, Woolworths avoided framing its decision within broader social or political discussions, focusing instead on meeting customer demand.

These changes reflect a strategic pivot back to customer-centric decision-making—a point I emphasised in my critique last year.

Why Businesses Should Avoid Political Stances

Woolworths' experience underscores why businesses should avoid politically charged issues unless they are central to their brand identity or values. Here's why:

Alienating Customers

In 2024, we saw that taking a stance on divisive issues can alienate customers. In competitive markets like retail, where products are similar, this leads to lost sales and reduced loyalty. If I am upset with Woolworths, what is the big ask for me to go to Coles? It is a right or left turn in my local shopping centre.

Financial Risks

Businesses thrive by meeting customer needs—not by engaging in ideological debates.

Employee Morale

Woolworths' statements acknowledge that the decision also affected its employees. Many of them felt hurt regarding their patriotism, which led to unnecessary tensions in the workplace. These people, much like you and me, take pride in our country and are deeply affected when its name is tarnished.

Perception Becomes Reality

Even if the announcement was made for commercial reasons—which I am not so sure—as Woolworths claimed last year, it can easily be interpreted as ideological—especially when amplified by public figures or media coverage. These people do not want the truth; they want a story.

Lessons for Businesses

Woolworths' reversal offers valuable lessons for companies navigating today's polarised climate:

Listen to Your Customers

Customer feedback should always guide business decisions, especially in retail, where consumer loyalty is critical.

Stay Neutral When Possible

Avoid stances on divisive issues unless they align directly with your brand values or mission.

Focus on Core Offerings

In Woolworths' case, providing great products at competitive prices should take precedence over engaging in cultural debates.

Communicate

If potentially controversial decisions must be made, consider whether you need to communicate and ensure that silence is golden.

Be prepared to reverse course.

If caught up in a potentially controversial decision, consider immediately reversing course. A simple comment like "I did not mean it like that..." can do wonders.

Why This Reversal Matters

When I wrote about this issue last year, my argument was simple: businesses should focus on their core operations rather than wading into politically sensitive waters. Woolworths' decision to pull Australia Day merchandise in 2024 was a misstep that hurt its reputation, finances, and employee morale—all of which could have been avoided by staying neutral.

This year's reversal validates those concerns. By reintroducing Australia Day merchandise and focusing on customer needs rather than broader social conversations, Woolworths is taking steps to rebuild trust and repair its brand image.

Final Thoughts

The lesson here is clear: when politics enters the boardroom, it rarely leaves unscathed. While businesses might feel compelled to engage with social issues to demonstrate values or connect with specific audiences, doing so often carries more risks than rewards—especially when those issues don't directly align with their brand.

This reversal isn't just about being right—it's about highlighting how businesses can avoid unnecessary controversies by staying focused on what they do best. In today's polarised world, neutrality isn't just safe—it's innovative business.

What do you think? Was Woolworths right to reverse its decision? Share your thoughts below!

This interview deals with Woolworths and its values and the social conversation, woke, etc. I think it is a perfect example of how politics and business should not be mixed and why you should not do it.

Firstly, are the effects of Woolworth's announcement on Australia Day still with them? I suspect yes.

The Share Price Impact

When Woolworths went public with its decision to pull Australia Day products, there was an immediate backlash from customers and politicians alike. Looking at the share prices in the month since shows that this decision likely in part impacted Woolworths' bottom line:

The share price of Woolies vs Coles over the past month. Green Square is when Woolies went public over its decision not to sell Australia-themed merchandise on Australia Day.  As you can see, Wooly's share price on the graph was slightly ahead of Coles. Today, Coles is 2.90% up, and Woolies is -0.06% down. That is close to 3%. See the Black line.

You cannot claim that it is the supermarket business as Coles is up. Looking at the figures, I would say that the share market found something it prefers in Coles to Woolworths, and politics likely played a role in this divergence. Customers voted with their wallets; the share market will react to this fall in the customers' wallets.

So, let us go to the interview and see what Woolies' CEO said.

Banducci: Woolworths' CEO said in the article.

"Our customers are saying focus on delivering value for us and not getting engaged in conversations that are broader than that."

My views: If you find this comment offensive, what am I, some ignorant, uncaring person? Also, this statement ignores the genuine customer dissatisfaction with Woolworths' decision. Many customers made it clear on social media and in complaints that they care about these political issues and disagree with Woolworths wading in.

Overall, modern Australia is better informed than ever; we are politically aware and care. Issues are important to them. In an industry that Woolies is in, where Coles and Woolies often have almost the same products and are close together, it's easy for someone to create by walking into one or the other. Politics will affect buying decisions in such an environment, mainly when well-known and influential political leaders such as Leader of the Opposition Peter Dutton say something. Let us face it: he has about 50% of Australia's vote.

Banducci: Woolies “could clearly have done a better job” of explaining its decision over the merchandise.

My views: That is for sure; Woolies could have done better by saying nothing, which is what almost all retailers did. Why antagonise people necessarily?

Banducc: said, “I do feel anxious about the impact this is having on our team. They are proud, hard-working Australians, and for them to be seen as anti-Australian or woke is fundamentally unfair,”

My views: I agree. It appears that most, almost all, the team members of Woolies were against the announcement; see here, here and here

Banducc: denied that Woolies was making a political statement with its decision, 

My views: There is certainly a smell of political involvement in this statement. Many retailers made a similar decision for commercial decisions, but I am unaware of any of them publicly announcing it before this happened. Once it broke out, it could have been fixed quickly, but it was not.

Once politics enter the conversation, separating business decisions from political perceptions is almost impossible.

A Lesson for Business

The fallout from Woolworths' choice shows why business is generally best served by avoiding political stances. Even if well-intentioned, politics are inherently divisive and risk alienating your customer base.

Focusing solely on business operations rather than wading into political debates is usually safest. Let your customers view your business decisions through an economic lens rather than an ideological one.

The Australia Day controversy provides a cautionary tale for companies considering taking a political stand. In our polarized climate, politics and business remain uneasy bedfellows at best.

If you have a subject you care about, say it as an individual. It's a free country, and you can do it and keep your business out of it.