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Woolworths is building a new fully automated distribution centre in Melbourne that is expected to be operational later this year.

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Woolworths has reported H1 sales up 3.8% to AU$29,807m and earnings before interest and tax (EBIT) up 9.9% to AU$1,430m.

Australian Food sales up 4.9% to AU$19,339m

Woolwoths' Australian Food business has benefited significantly from the retailer's stronger focus on the customer in H1, with its Voice of the Customer (VOC) scores showing overall satisfaction reaching 82%, compared to 78% for the same period last year. Like-for-like (LFL) sales grew 4.9% in the half despite the retailer's investment in lowering prices resulting in 2.0% price deflation, with 4,200 items now included in its Low Price Always or Prices Dropped campaigns. In-store improvements also continued at pace with 37 renewals and 35 upgrades during the half, as well as its latest flagship concept being launched at Marrickville in Sydney a few weeks ago. During the half 10 net new stores opened, including one Metro.

Investment in supply chain operations

Huge sales growth in online grocery has been driven by a number of factors, not least the creation of WooliesX in June, which is tasked with investing in digital and data to drive an enhanced and seamless expereince. Pick up services have been rolled out to over 1,000 food sites in H1, improvements have been made to the speed and expereince on woolworths.com.au, plus second and third online customer fullfillment centres have opened in Brookvale, Sydney and West Footscray, Melbourne. The retailer will further look at accelerate this area in H2.  

Woolworths in Australia will step up its online service and offerings as Amazon enters the market.

Woolworths to open four dark stores

Woolworths has launched a number of different initiatives during the last three months including the country's first nationwide grocery Pick Up service and enhancing its supplier portal. Its latest announcement is to open four 'dark stores' to solely pack and ship online orders. These stores will be closed to customers and are expected to open by the end of next year.

Ready to compete with Amazon

Amazon will offer products sold by third party retailers selling via Amazon, as well as products bought from manufacturers and suppliers sold by Amazon themselves. Their marketplaces frequently offer discounts to drive sales and engagement. Woolworths' chief executive, Brad Banducci, said 'We track pricing against all of our competitors [...] making sure our customers get a good deal every time they shop at Woolworths, so it’ll be part of our price tracking no doubt'.

Woolworths' chairman, Gordon Cairn, warned manufacturers, 'If they go onto Amazon and Amazon cuts prices substantially, what that forces other retailers to do is reflect on whether they should be stocking the brand if they can’t do it and make money [...]'. Cairn highlights service and consumer understanding to become even more important, 'We want to be obsessive about our customers, their needs and how we serve them better [...] if we do not we will lose out to those who do, like Amazon'.

Competitive retail landscape

We have seen many of the leading retailers in Australia announce new initiatives and strategies to combat the increasing competition in the market. Coles for example, are experimenting with their delivery options, teaming up with Deliveroo and Uber to optimise its delivery strategy to stay competitive. Meanwhile Metcash and Costco are looking to implement online websites to drive growth and maximise profit margins.

Woolworths is now out growing fierce rival Coles for the first time since Wesfarmers acquired the business. It will hope that its initiatives will continue the strong momentum that it's gathered and combat Amazon's entry to the market.

A nationwide initiative

Woolworths Pick Up service provides its online customers with a convenient, nationwide collection service. The service – the first to be available nationally – incorporates 970 Woolworths locations with 670 stores added in the last month alone.


Pick Up is available seven days a week and is free for orders over $30. Customers can keep track of orders via an app, which can be used to notify store teams of a customer approaching the store to pick up an order. This allows the store to prepare the order, reducing the time needed to complete the transaction.

Convenience and personalisation

Woolworths Head of Online Operations, Lisia Roth said; “Not only do customers want ultra-convenience and personalisation, they also want the experience to be painless and seamless. The Woolworths app will send you a notification when your order is ready, and you can alert us when you’re close by, so that we can have everything ready for your arrival.”

She added, “With the addition in just one month of over 670 stores as online shopping collection points, we are now providing additional convenience for customers in all corners of the Country. From remote regional towns with only one Woolworths supermarket to major metro areas where customers have multiple Pick Up location choices, customers will be able to get more time back in their day as we do their shopping for them.”


Woolworths Pick Up initiative demonstrates how technology is being used to improve the customer experience. We’ll be exploring this and much more at this year’s Supply Chain Summit. Come along and be inspired.



Presentations

28/09/2017
An essential summary of supply chain priorities, latest network developments, and other key statistics for Woolworths.

This presentation identifies how food and grocery businesses can increase the resilience of their supply chains, and be better able to absorb shocks and risks in an increasingly volatile and uncertain world.

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.