Coles Myer's bold five year strategy that includes job cuts, brand integration, supply chain upgrades and hypermarkets may have scared off any potential predators, retail analysts said.

One analyst believes the planned Coles SuperCentres, which would combine the Kmart brand with Coles supermarkets, could lead to a reduction in industry profitability as rivals try to match the new stores.

Citigroup said the SuperCentres, along with other initiatives such as rebadging Bi-Lo, lifting convenience stores sales through a private label offer and further fuel discounts, will cause concern among industry players such as Woolworths Ltd and Metcash Ltd.

Coles Myer gave a fuller picture of its new strategy on Thursday after it rejected a $17.3 billion takeover offer last month from a consortium led by US group Kohlberg Kravis Roberts (KKR).

Citigroup retail analyst Craig Woolford said the strategy had called the bluff of the private equity predators and mimics some of what the consortium planned to do.

Therefore private equity will find it difficult to acquire the company for an attractive price while still achieving their target 20 per cent internal rate of return, Mr Woolford said in a research note.

But Mr Woolford said Coles shareholders should be thanking KKR and its partners because the bid provided the catalyst for a massive change in the company's future.

Shares in Coles Myer fell 29 cents or nearly two per cent to $14.32 on Friday.

However, some analysts remain sceptical that Coles Myer can achieve its underlying net profit target of $1.06 billion by 2008 and still cut 2,500 jobs or 33 per cent of overhead staff in IT, human resources, finance and marketing.

Goldman Sachs JBWere analyst Phillip Kimber said while there was significant potential for the Coles business, there was also significant risk.

The retrenchment of one third of Coles Myer's non-store staff has the potential to cause significant disruption, he said.

Mr Kimber retained a neural recommendation on Coles Myer, believing the resolution of the ownership issue was some way off.

Mr Woolford said Coles Myer's aim to save $363 million through the job cuts by 2008 was unrealistic given the two year time span.

He increased Citigroup's risk rating on the company to high and also raised its 12-month share price target to $14.40 from $14.

Credit Suisse analyst Michael Jenneke thinks an increased bid by private equity groups was still a possibility, with bids up to $15.50.

Senior management have backed the transformation plan with their own money, giving up 10 per cent of their salary in order to claim a dividend five times that amount if the strategy achieves its goals.

Citigroup