Woolworths sees Aldi/Coles as threat, wants customers to put them first

Woolworths aims to win the trust of its customers “and increase its share of their food spend ” through a program of lower prices and improving all aspects of their shopping experience.

Recognising that lower prices are not the only strategy to win the hearts and minds of consumers, Woolworths Food Group Managing Director, Brad Banducci, said that while “it is clear is that while lower prices are essential, the true battleground is the overall customer experience. So we will not be beaten on price, and we will provide better convenience, superior freshness and a more appealing range, and a focus on innovation,” he said.

Mr Banducci noted that while customers are visiting Woolworths more frequently than ever before, they are also getting fewer of their needs exclusively from Woolworths.

“Put simply, we need to gain customer trust and a greater share of their shopping basket, and we have a clear plan and the investment capacity to do so. By getting customers to put us first, we can regain the sustainable sales momentum we need to extend our leadership,” Mr Banducci said.

The strategy will focused around three key principles: improving their core offer to ensure that customers put Woolworths first (Offer); innovating to meet more of their customers’ needs (Growth); and creating further customer value by organising for success and executing a Lean Retail model (Efficiency).

According to Mr Banducci, Woolworths is already well underway in implementing the first wave of this strategy with a major investment program. This includes $125 million of price reductions since January (with more to come); matching online and store pricing; additional work hours to lift customer service levels; extra stock levels to boost availability; and, improving the range and freshness of fruit and vegetables.

A new pricing and value strategy will see Woolworths attempt to neutralise Coles and contain Aldi’s impact on sales. This strategy will see measures including lower pricing, better ranging, a revised and improved loyalty system, and a detailed strategy for improving Woolworths Own Brands.

A rebalancing of capital expenditure between new stores and existing store refurbishments will see in excess of 80 stores refurbished annually for the foreseeable future (compared with 23 stores in FY14 and 61 in FY15). These refurbishments will be designed around local customer preferences and will be prioritised in areas where Woolworths sees the greatest potential for customer growth.

Woolworths also intends to develop 20-30 new stores per annum in line with population growth and to address gaps in their network.

In order to deliver new products and a better customer experience Woolworths has established a new division called Woolworths Food Co with responsibility for developing new product categories, improving supply and processing facilities, and developing strategic sourcing relationships.

Food for Now/Food for Later will continue to be an important category for Woolworths, who ?under a 12-year contact – will partner with Beak & Johnston a Western Sydney based food manufacturer to deliver ultra-fresh, ready-to-cook and ready-to-heat meals.


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