Woolies prepares for ‘onslaught’
IOL Business - Feb 17th 2016, 10:18
Johannesburg - Woolworths is preparing itself for what CEO Ian Moir calls an “onslaught”, which he believes is coming in the next 3 to 5 years.
Moir says the retail landscape will be “totally different” in the next few years, as online sales become an increasingly important part of the retail landscape, and international companies such as Zara - and more recently - H&M - enter the local market.
As an example of the growth in internet sales, Moir cites the fact that clothing outlet Country Road is seeing online sales growing at 28 percent a year, and virtual retail now makes up 11.6 percent of its business.
The company’s Australian outlet - David Jones, which it bought about 18 months ago for $2 billion - will get to a point soon where its online sales make up 10 percent of overall income.
In the half year to December, the listed food and fashion company reported overall sales up 17.1 percent to R35.5 billion, which was bolstered by the David Jones deal, as sales would have grown 12.3 percent without the new brand. Basic earnings gained 52.8 percent, while headline earnings gained 44.9 percent. Group-wide internet sales were not stripped out in the company’s official statement.
Moir, who took over as CEO in 2010 to replace Simon Susman (who became deputy chair before being appointed chair), says the company has to get ready for the international onslaught and the need to be able to become a digital offering.
“It will get here, we will fail if we are not ready,” he told a media gathering this morning.
Moir adds the company is transforming for the digital age and is putting skills, systems, and strategy in place to be ready for what he calls the “age of the customer”.
Part of this investment, which he declined to disclose, is moving closer to understanding customers on an individual level so the company can use the data is gleans from what people purchase - which is gathered through store cards - to develop shopping patterns and trends that it can use as intelligence to better sell what customers want.
“The days of blanket advertising have moved on.”
It is standard for companies not to disclose information to third parties and not to link personal details to shopping trends when working out strategy.
Moir adds, while there is much to do, this approach is doable, and all the company’s businesses are capable of serious growth.
In its recent results announcement, it cautioned conditions are expected to become more difficult in both South Africa and Australia.
“Increasing interest rates in South Africa will add further pressure on the local consumer. Our response in both markets is to ensure that we offer our customers value and quality across our brands, products, and services, as well as focus on costs and efficiencies. In the long term, our strategies remain focused on delivering sustainable profit growth in all the markets in which we trade”.
The Woolworths group is “constantly investing” in aspects such as merchandise, supply chains and online platforms and will bring David Jones up to speed with the rest of the group, says Moir.
Woolworths is worth around R83 billion.From © Independent On-line 2016. All rights reserved.
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