Regaining momentum
2017 was a year of significant progress for Woolworths. We’ve regained competitiveness with lower prices and better service offerings, and seen a really positive response from customers to our new format stores. However, we know customer expectations continue to change, particularly with the emergence of new digital offerings, and it’s up to us to meet them.
Under the leadership of CEO Brad Banducci, the team have concentrated on moving from a turnaround phase focused on fixing our business foundations, to a transformation phase, focused on leveraging teamwork, digital and insights to materially improve our business.
Listening to our customer
We have renewed our focus on team training and aligned our team incentives to customer feedback. This has improved our team engagement and Voice of Team (VOT) scores and we are pleased with the progress we have made over the last 12 months to put the customer first which has driven meaningful improvement in our Voice of Customer (VOC) scores.
The connected customer
Woolworths has been part of the local Australian community for close to 100 years now. We have a network of close to 1,000 supermarkets across the country, and employ nearly 200,000 team members. We have a long and deep history with our customers. We are constantly evolving our offers as we grow with our customers and as their needs change.
Over time we’ve learnt that customers’ shopping habits are changing, and so must Woolworths to meet the new needs of our customers. Providing options for customers through online, pick-up, delivery as well as a great bricks-and-mortar experience is very important as customers continue to seek ever-increasing levels of convenience. It’s why we’re working hard to find new ways to innovate and create more personalised and connected shopping experiences for them through our store formats.
In response to these changing customer needs WooliesX was established, which combines our loyalty and digital assets into one dedicated team to help us chart the pathway for the connected customer. Through this team we are even better placed to connect technology, data and insights to help make our customers’ shopping experience more personal and easier.
Pick-up is a key part of this strategy and we’re proud to have rolled out the service to almost 1,000 Woolworths Supermarkets, 1,250 BWS and 220 Dan Murphy’s liquor stores in the past 12 months.
More and more often we’re seeing customers now choosing a combination of visiting their local store and shopping online and they expect us to deliver a great service whatever their decision. By being in the places our customers tell us they want to shop means we are able to deliver an easier and more convenient shopping experience.
Sustainability
When it comes to sustainability, we understand that we will be judged on what we do, not what we say. To keep our future and current developments as green as possible, we became a member of the Green Building Council of Australia in 2017. We’ve also committed to obtaining a Green Star performance rating for currently owned retail centres while aiming to achieve an even higher Green Star rating for future developments. In 2018 we will deliver a 5 green star rated development in Heidelberg Victoria which will be assessed on both a design and performance basis. This will be one of the first 5 Green Star rated supermarket developments delivered in the country and will set the benchmark for a standalone sustainable supermarket development.
We have committed to opening a new supermarket and Dan Murphy’s store in the Burwood Brickworks development, which has set an ambitious goal to become the most sustainable shopping centre in the world. We have been investing in renewable energy and will investigate further cost effective investment as technology and commercial opportunities evolve.
We also commenced a roll-out of solar across our supermarket portfolio, including installing solar panels on the roofs of supermarkets as well as on car parking shade sails. We are also about to commission a 1.2MW solar install (3,344 panels) at our new Distribution Centre in Melbourne South. This will double our installed solar PV capacity to over 2.4MW.
Investments and developments
In 2017 we opened 19 new full-line supermarkets, seven new Metro supermarkets and nine new Dan Murphy’s stores. Of our new supermarkets five of these were delivered by our internal development team. We continued investment into Dedicated On-Line Supermarkets (DOS). In addition to our existing site in South Sydney, we opening two new DOS facilities at Brookvale on Sydney’s Northern Beaches and another in Footscray in Melbourne’s north and will continue to invest in this area to provide support to our store network.
In line with our strategy of aligning new store growth to population growth, our development focus continues to shift to unlocking high quality development opportunities in Sydney and Melbourne metro locations which has seen a shift towards mixed use developments. We believe that retail should not be the forgotten element of a mixed-use development and are focused on how we can provide a thriving retail environment in mixed-use developments.
Of course, it’s vital that our existing fleet of stores is well managed and provides the best customer offer and amenity. That’s why we’ve acquired a number of existing stores and centres, and are hard at work improving the offer for our customers.
We have also made a significant investment into renewing our existing fleet and completed 72 renewals in 2017. Late in the year we also unveiled our latest new-format store at Marrickville Metro in Sydney. We’ll be keeping a close eye on how customers respond to the new format and look to roll-out popular elements in other stores.
We are also working closely with our Landlords to ensure that customer amenity is paramount. We are introducing shade sails to many of our stores, and are focusing on improving car parking and access to our stores.
In the future we expect the pressure on non-discretionary spending and the challenge of international entrants will continue to put pressure on sub-regionals, particularly with the performance of the Discount Department Store (DDS) market.
Well-located sub-regionals with a strong tenancy mix will continue to deliver, whilst others will need to reinvent themselves, particularly where the performance of the DDS has declined. We expect we will continue to see a blending of uses (retail, residential, office etc) which will promote a greater focus on mixed use development.
A focus on accessible and convenient car parking in the future will also be crucial as will the provision of services and entertainment in neighbourhood centres. We will continue to look at new ways to engage our customers and provide the quality experiences they want.
We expect to see strong performance from neighbourhood centres which are supported by a well-performing supermarket anchor and a convenience-based complementary specialty offer.
Looking forward
With the expectation the market will remain competitive in the year ahead, customer-focused retail will remain our priority for 2018.
We will continue to build on the foundations we have established in the last year to meet the changing needs of our customers.
We know our customers have choice and it’s critical we continue to give them reasons to choose us for their various shopping needs. We will continue to focus on leveraging technology to create convenient, personalised and connected experiences and evolve our store formats to match those changing needs.
It’s an exciting time and we’re looking forward to delivering better experiences for our customers, teams and the communities we are privileged to operate in.
WATCH RALPH KEMMLER SPEAK AT THE BIG GUNS LUNCH – VIDEO LINK HERE
About Woolworths
Founded in 1924, Woolworths Group is one of Australia’s largest retailers with more than 3,000 stores across Australia and New Zealand that span food, drinks, petrol, general merchandise and hotels. Our company manages some of Australia’s most recognised and trusted brands – including Woolworths, Dan Murphy’s, BWS and BIG W – and endeavours to create a world class experience for customers across all of our stores and platforms.
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