Big changes coming for Woolworths in South Africa
Retailer Woolworths says it plans significant reinvestment into its South African business, particularly in digital and data, with a further R8 billion of capex scheduled over the next three years.
The group on Wednesday (31 August) published its results for the 52 weeks ended 26 June 2022, showing marginal turnover, buoyed by strong online sales growth and encouraging second-half performance.
“I am very pleased with the Group’s performance. We have delivered the healthiest balance sheet in almost a decade, double-digit profit growth supported by strong momentum in Australia and signs of the turnaround of FBH, and the return of excess cash to our shareholders,” said WHL Group CEO Roy Bagattini.
The group admitted that its food business underperformed, despite very strong online growth.
Food grew turnover by 4.2% – reflecting the impact of the high Covid base and the return to out-of-home consumption, an increasingly competitive backdrop, and low product inflation across key categories, it said.
Woolworths has competition in the premium space with the likes of Shoprite Checkers and Pick n Pay increasingly playing in that space.
Online sales increased by 45.4%, contributing 3.2% of South African sales, assisted by the further rollout of the group’s on-demand online offering.
Woolworths has previously noted that its investment is increasingly shifting to digital, data, and online. Woolworths said it will expand the scope of an already-established group-wide data organisation, elevate data analytics, and embed a culture of data-driven decision-making. It said it will further leverage the existing wealth of data to better inform decisions and processes.
Additionally, the group said it will ‘refresh loyalty’ in all its businesses to “enable greater differentiation and personalisation as a driver of increased engagement and incremental spend”.
To address the softer than expected growth in food, Woolworths said its biggest opportunity lies in growing the core business.
It will focus on the following key priorities:
- Driving on-shelf availability;
- Amplify its differentiated value proposition;
- Increase its marketplace presence;
- Dial-up marketing and customer engagement;
- Continue to drive profitable growth and sustain returns on capital.
Woolworths said it will accelerate physical space growth and test new concepts, formats and layouts at its stores. It will also drive on-shelf availability, range consistency, and increase localised offerings.
For its Fashion Beauty and Home division, which showed signs of recovery in the reporting period, Woolworths said it will continue to execute its ‘edit to amplify’ Fashion strategy and drive opportunities to grow market share in Beauty and Home, by:
- Implementing a more flexible, responsive sourcing model, including increasing its local manufacturing component.
- Driving a multi-year investment in FBH value chain to transform its planning systems, processes and logistics.
- Nearing the end of space rationalisation, and a new format W Edit coming on stream
Woolworths said it aims to achieve ‘right price, first time’ and will optimise its physical footprint while trialling new catalogues and formats. It will also expand its beauty offer in existing doors and introduce new stores, including Africa.
The group is also targeting increased market share for its ‘Home’ division, with a particular focus on key categories, while also leveraging online.
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