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

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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.

Woolworths has reported that Q3 sales from continuing operations in the 13 weeks to 3 April 2016 declined 0.7% to AU$14,400m.

Australian food, liquor and petrol sales declined 0.6% to AU$11,736m

Australian food and liquor sales in the period grew 0.4% to AU$10,659m, however LFL store sales declined 0.9%. Although Woolworths said that customer numbers increased in the quarter, growth was impacted by its ongoing investment in price (average prices down 2.4% compared to the previous year) and declining items per basket.

Woolworths continues to focus on rebuilding its business, with renewed investment in price, especially in fresh food, in April and investing in more team hours in-store, particularly at weekends. In Q3, Woolworths opened one net new supermarket, refurbished a further five supermarkets and closed three Thomas Dux stores. In Liquor, Dan Murphy's continued to perform well, with one net new store opening in the quarter, whilst BWS recorded positive LFL growth, despite two net store closures.

Petrol sales cause a drag on total Australian performance

Petrol sales declined 8.8% to AU$1,077m due to a 3.2% decline in LFL volumes and an 8.1% drop in average fuel prices. Volume declines were explained by significant competitor openings. Alongside this, total merchandise sales growth also slowed to 3.6% or 1.1% on a LFL basis.

Despite Woolworths saying that sales cycled strong promotional activity in the previous year, this result will be disappointing given Coles reported an 8.1% LFL increase in sales from its Coles Express stores in its Q3 results. Woolworths opened two net new stores during the period. 

New Zealand supermarkets grew 3.8% to NZ$1,557m

LFL sales grew 0.9%, despite deflation of 0.7%, as the retailer continued to invest in price through its 'Price Down' campaign. The retailer is also focused on improving customer service, with customer perception in this area improving.

Further AU$150m investment in H2

The retailer aims to invest another AU$150m in price, service and loyalty in the second half of the year and will continue its review of its general merchandise business, which saw sales decline 4.6% in Q3. Woolworths has been clear to state that it is in the first year of a three to five year journey to restore sales momentum in the business. Although, its CEO Brad Banducci is confident it is on the right track and a group wide review of all aspects of the business is still under way, in our opionion it will take significant time for the retailer to regain momentum and the trust of shoppers.

Woolworths has reported a 3.6% sales decline to AU$12,395m for its Australian food, liquor and petrol division over the 14 week period to 4 October 2015. However, supermarket sales in New Zealand were more encouraging, growing 3.9% to NZ$1,559m.

Australian food and liquor sales up 0.4% to AU$11,064m

Like-for-like (LFL) sales in the quarter declined 1.0%, with store openings including; six net new supermarkets, three net new Dan Murphy's and seven net new BWS stores, helping maintain positive sales growth. During the quarter Woolworths invested AU$100m in lower prices, launched new marketing campaigns Price Drop and Low Price, Always, put more staff hours into its stores, looked to improve fruit and vegetable availability, reduced checkout queue times, refurbished 25 supermarkets and this week announced the relaunched of its loyalty scheme.

Petrol sales declined 27.9% to AU$1,331m

Petrol sales were heavily impacted by the 10.6% reduction in average fuel prices, a 2.3% decline in LFL volumes, as well as changes to the Woolworths Caltex alliance, whereby Woolworths no longer recognises sales from Caltex operated sites. On a more positive note, forecourt convenience store sales grew 10.0% in the quarter, with LFL sales up 7.2%. Strong promotions and a focus on seasonal products were given as reasons for the strong performance. One net new petrol site opened in Q1.

NZ Supermarkets continue to show resurgence

Despite low inflation (0.5%) and continued investment in lower prices, LFL sales grew 2.5% in Q1. The retailer continued to drive its Price Drop and Price Lockdown campaigns during the period, with an additional 595 products added to Price Lockdown. Three net new stores opened in Q1 and one store was refurbished.

Accelerated transformation will impact margin

Woolworths is working to address its sales slowdown and has decided to accelerate the work it is doing. As a result of the increased investment Woolworths predicts that H1 group net profit after tax will be in the region of AU$900m - AU$1.0bn, a decline of 28-35% compared to H1 2015.

Managing Director of Woolworths Food Group, Brad Banducci, commented, “We are resetting our Food business to ensure a sustainable leadership position and maintain strong returns to shareholders. We are focused on our strategy to get customers to put us first as we invest in price, service and loyalty.”


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