Woolworths is not only changing its pricing and advertising following a weak 2.3% sales rise for full-year food and liquor operations for the 12 months to June 28, but it’s looking at changing retail formats including to “premium, rural and budget” under new director of supermarkets Dave Chambers.
Woolworths’ results compared with Coles Supermarkets 5.3% lift in annual food and liquor sales.
In late August, Woolworths said it had made good progress in its transition to its “Lean Retail Model, with cost savings tracking ahead of stated targets of $500 million.
“However, FY16 will bear the impact of our response to the competitive environment to meet our value commitment to customers. Investments in price, service and experience will exceed cost reductions in FY16,” Woolworths said.
While Woolworths’ total group sales were down 0.2 per cent to $60.7 billion, its Australian Food, Liquor and Petrol earnings (EBIT) rose $2.1% to $3.434 billion.
The moves came as analysts and investors called for Woolworths to focus on food and liquor and move out of hardware.
Mr Chambers, the former managing director of Woolworths Progressive Enterprises, which operates Countdown Supermarkets in New Zealand, was appointed in February. He faced low stock on supermarket shelves, customer queues at checkouts, reduced staff hours to achieve profit guidance, and a slowing rate of store refurbishment.
Mr Chambers said that he is looking at replacing Woolworths’ nine store models or formats with four types of store formats: premium, mainstream, mainstream rural and budget, to better reflect shoppers’ demographic and geographic differences.
Newspaper reports said that Woolworths is investing $65 million over the next 12 months upgrading its shopping trolleys, flooring, shelving and lighting, and signage, while opening up store fronts to make them more appealing to customers.