South Africa’s Woolworths steps up battle for affluent shoppers

By Nqobile Dludla

JOHANNESBURG (Reuters) – Woolworths Holdings plans to open extra shops and ramp up its on-demand supply service, its chief govt stated on Wednesday, because it steps up a turf struggle for South Africa’s prosperous buyers.

The Cape City-based retailer is going through fierce competitors from rivals Choose n Pay and Shoprite-owned Checkers, which have been pushing onerous into the higher-margin upmarket area of interest dominated by Woolworths.

Choose n Pay and Checkers are overhauling their shops, introducing recent produce, premium ready meals and free-range meat, in addition to launching on-demand grocery supply companies.

“While our rivals have actively been opening new shops and new codecs, we have been consolidating our place, and that is seen us lose some market share within the post-COVID world,” Woolworths Chief Government Roy Bagattini informed traders after the corporate reported 4.2% meals gross sales progress within the 12 months to June 26, down from 6.9% the earlier 12 months.

Since 2020 Woolworths’ retailer footprint has grown by 3%, which is “not aggressive sufficient”, he stated.

“We’re now stepping up our area progress in a really focused means by means of new shops and the growth of present footprints, which can allow our progress in new classes equivalent to pet, wellness and liquor,” Bagattini stated.

Woolworths will even improve on-line capability by doubling its on-demand supply fulfilment shops, he added. It presently has 48 such websites.

To assist the expansion initiatives, the group introduced deliberate capital expenditure of 10 billion rand ($586.55 million) for the following three years. Of that, 70% will go to the South Africa enterprise, the meals operation of which accounted for income of 39.4 billion rand and is the corporate’s largest division.

Woolworths, which additionally operates in Australia and New Zealand, will proceed to put money into reducing costs to seize new prospects, Bagattini stated.

These efforts are already shifting notion, with a ten% improve within the transaction numbers from new prospects, he added.

Woolworths, which additionally sells garments, magnificence merchandise and homeware, reported a 6.5% bounce in headline earnings per share (HEPS) and a 1.4% rise in group turnover, helped by an improved second-half efficiency as COVID-19 lockdowns eased, notably in Australia and New Zealand.

By 1248 GMT shares in Woolworths have been up 4.6%, additionally boosted by a bumper dividend of 149 cents per share, up from 66 cents a 12 months in the past.

($1 = 17.0487 rand)

(Reporting by Nqobile Dludla; Modifying by David Goodman)