Woolworths’ supermarket customers will see more self-service checkouts, and fewer checkout staff, as the company continues to transform its stores network.
The retail giant announced on Monday it will close 17 underperforming supermarkets across Australia over the next financial year and axe 500 support and supply chain employees as part of a $960 million restructure.
The company has not yet named the stores it will close so as not to alarm staff, suppliers and customers.
But newly appointed chief executive Brad Banducci revealed that Woolworths will install “more self-service checkouts and faster self-service checkouts” as the group upgrades existing stores and opens new ones.
That’s likely to see its supermarkets progressively reconfigured to accommodate more self-service pods where customers can scan their items, bag them and pay.
Woolworths losing share
While self-service pods are popular, increasing their numbers could attract more customer backlash against Woolworths.
The findings of a new survey by research group Canstar Blue released on Monday showed that the retailer ranked lowest against its supermarket competitors on customer service and low in terms of value for money, food freshness, store layout, specials, and the quality of its private label products.
The Canstar Blue survey of 2,925 Australian shoppers found that Woolworths customers are not as satisfied as they are with Coles, Aldi, Foodland and IGA.
German supermarket chain Aldi has been steadily gnawing away at Woolworths’ dominant supermarket position, building its total market share to about 10 per cent as it expands around the country.
Interestingly, it has so far chosen to steer clear of self-service checkouts and has publicly stated they are not part of its retail strategy.
Slower expansion pace
In announcing his plans, Mr Banducci said that while Woolworths will actually continue expanding its supermarket network from the current 961, it will do so at a slower pace.
“We have decided to slow net supermarket openings from approximately 90 planned over the next three years to approximately 45,” he said.
“Stores to be closed are primarily either loss-making or in the bottom quartile of the portfolio measured on sales per square metre.”
Mr Banducci said that Woolworths expected to hire 10,000 additional staff over the next few years across its overall network, which also includes discount department chain Big W, Dan Murphy’s and other liquor stores, petrol stations and hundreds of pubs across Australia.
Masters almost under the hammer
At the same time, Mr Banducci confirmed that Woolworths was at an advanced stage in offloading its disastrous Masters hardware operations, and is close to selling its Home, Timber and Hardware business.
But he downplayed speculation that Woolworths is prepping other operations for sale, including its Big W, petrol, liquor and pubs businesses.
“We are still growing and employing people every day,” Mr Banducci said. He added, however, that the company will be reviewing all non-customer facing roles after also announcing that 1,000 positions are being redeployed from back-office functions into other parts of the business.
Mr Banducci said that Woolworths’ strategy to get shoppers to put it first was beginning to pay off.
“While we have had to make some tough decisions and this has ramifications for many of our team, we are confident we are putting in place solid foundations for the future and early results give us confidence we are on the right track.
“This will be a three to five year journey and we are determined to drive sustainable improvements in sales per square metre and return on fund employed to deliver value for shareholders.”
Reaping the benefits
Yet a Canstar Blue spokesperson said that delivering value should not be done at the expense of customers.
“Our survey analysis found that the single biggest driver of satisfaction for supermarket shoppers is value for money,” he said.
“We all spend a lot of money at the supermarket – behind our mortgages it is a major cost – and overwhelmingly we want to save money. It is a delicate balancing act for supermarkets though because for prices to be cheaper, other non-product services probably need to be reduced.
“Woolworths is making changes primarily in the non-customer facing areas of the business though, so hopefully shoppers will reap the benefits of any savings without noticing any reduction in services.”