Woolies eyes Pick n Pay’s food trolley

Woolies eyes Pick n Pay’s food trolley

RETAILER NEWS

Business Day - Feb 17th 2012, 13:40

High-end retailer Woolworths will be opening 10 new bigger-format supermarkets in the medium term, CEO Ian Moir said yesterday, the first of which will be on William Nicol Drive in Bryanston, Johannesburg, the street where competitor Pick n Pay has set up its premium offering. 

Mr Moir said there was a gap in the market, especially since "Pick n Pay was not as focused as it has been in the past."

"We have been talking about this as a strategic direction for the business for a long time. We want to get people to think differently about Woolies . We are changing our values, making our prices more competitive and expanding our offer. Most importantly, we want them to finish their shopping at Woolies: we want them to shop with a trolley, not a basket."

Pick n Pay chairman Gareth Ackerman said Woolworths’ desire to capture more of the food basket was nothing new.

"We understand their challenge clearly. We have the right plan in place to not only defend, but gain share at this end of the market. We remain the best place in SA to do a ‘trolley’ shopping, and that is a strength we intend to enhance significantly over the next three to five years."

Mr Moir said the first 2450m² store would open in April on the corner of William Nicol and Wedgewood Link. There were also three or four stores planned on the books. "There will be lots of interactive areas, more things on offer, (you can) not only complete your shop but you can truly enjoy your shopping for foods."

The company would also be expanding its existing stores.

Nedbank Securities analyst Syd Vianello said the new supermarket concept was brilliant.

"It has come at an extremely opportune time when there is trouble in the grocery world with the number two player grappling with internal problems."

These problems, Mr Vianello said, could take a long time to fix. "Woolworths has a good year of opportunity to dig into Pick n Pay and steal market share." The only thing that would inhibit it would be its ability to create space and acquire land, he said.

Woolworths said group sales for the 26 weeks to December 25 grew 11,4% thanks to a strong festive season and foreign exchange gains. Food sales grew ahead of the market at 11,7%, with comparable store sales up 8,4%. While clothing and general merchandise sales grew 10,1%, it experienced problems in the apparel segment, which would be "fixed soon".

The group deferred an interim dividend until after April 1, when secondary tax on companies is replaced by dividends tax.