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Woolworths Food: High-end Retail in Tough Economic Times - Coggle Diagram

- - - - In 2000, Woolworths introduced other branded grocery items into its stores in addition to its own offering on the basis that Woolworths had ‘chosen the best [brands] for you’. 11 According to Woolworths, customers responded positively to this approach, which satisfied their need for convenience. 12 They were now able to do their main food and household item buying at Woolworths, instead of having to go to more than one store. It was at this time that the strategy became encapsulated in the phrase: ‘having the mind of a supermarket with the soul of a delicatessen’.
    - - Woolworths also adopted a philosophy of offering ‘everyday low prices’, in terms of which prices would remain consistent, instead of the ‘high–low’ price philosophy of many of the other retailers, which saw prices varying substantially when promotions came into effect.
  - - - Initially, food had been introduced to attract more customers into the clothing environment. 14 In most full-line stores, customers were required to walk through the clothing or homeware sections to get to the food section.
    - - Common food:
        
        By the late 2000s, Woolworths' stand-alone food stores sold a broad range of fresh vegetables (including organically grown vegetables) and fruit (including exotic berries and ready-made fruit salads); breads and cakes, dairy, meat, tinned foods; ready-made and frozen foods; Woolworths brand tea, coffee, cooking oils, soups and sauces; Woolworths and other wines; pet food; personal and household items and more. Popular non-Woolworths brands were represented in the biscuits, spreads, tea, coffee and chocolate drinks, break fast cereals, sweets and chocolates and cold drink ranges. Woolworths merchandised the non-Woolworths brands alongside its own branded products.
      - ‘speciality foods’
        
        What set Woolworths apart from other supermarkets was its emphasis on quality and the broad range of ‘speciality foods’, which included Thai, Mexican and Indian ranges.
      - Takeaway foods:
        
        Takeaway foods included burgers, sandwiches, sushi, wraps and a full buffet foods range.
    - - During the 1990s and early 2000s, the food business had repositioned Woolworths as a premium brand
    - - During the 1990s and early 2000s, the food business had repositioned Woolworths as a premium brand 15and, by 2004; food had become the star performer in the Woolworths group.
- - - - The Good Food Journey positioned Woolworths as
        
        environmentally friendly,
        
        organic
        
        and innovative.
      - specific measure：
        
        It intended to continue its product innovation with over 1 000 new lines launched per year; its first fresh baby food launch in South Africa; and its ongoing focus on improved taste, flavour, authenticity, health and sharper pricing. 30 A typical food store would hold about 3 500 product lines. The introduction of 1 000 new products each year was usually accompanied by a discontinuation of a similar number of products. 31
    - - Woolworths' principle of convenience would be achieved by:
        
        “a store rollout of over 132 food stores and Woolworths Food Stops in the next three years;
        
        reinforcing the main shop concept and aggressive pricing on basics;
        
        expansion of branded products, including making availability a key focus;
        
        putting a new project team in place; and
        
        managing volume demands.
      - important integral to the ‘convenience’ strategy.
        
        Woolworths' prepared or ready meals, and therefore convenience foods – including ‘TV dinners’ and buffet entertaining eats, and the takeaway range, which included a variety of sandwiches, burgers, sushi, salads and wraps – formed a major portion of stand-alone food stores' ranges and of the Engen Food Stop range. The proximity of the new food stores – many of which were only a few kilometres apart – to target consumers was integral to the ‘convenience’ strategy.
- - - - The thrust of Woolworths' strategy in February 2009 was a reduction in price of 245 items across a broad range of goods, to woo middle-income consumers in LSM 6–8 while retaining those in LSM 9–10. 58 Among these consumers were the so-called ‘black diamonds’ i – who had accounted for a growing proportion of Woolworths food sales, but were among the hardest hit by the tough economic environment. Susman noted that the customer base was a lot more price-sensitive than had been expected.
    - - Novak said the company was no longer a niche food business and noted that the new price-cutting strategy would position the food business to cope with the economic slowdown better. He added: “We are shifting our strategy to develop a relevant and competitive supermarket business, whilst still maintaining the successful speciality food formula that sets Woolworths food apart.” 60
      - Gilmour said the margins at Woolworths had been significantly higher than those of its competitors, adding that Woolworths' bigger competitors had to get buy-in from their suppliers to cut margins. 62 Novak explained Woolworths' ability to change tack easily: “We have the flexibility of having largely own-brand products to bring customers great value. This gives us greater control of the production process and helps us to reduce input costs.” 63
    - - Gilmour said the margins at Woolworths had been significantly higher than those of its competitors, adding that Woolworths' bigger competitors had to get buy-in from their suppliers to cut margins. 62 Novak explained Woolworths' ability to change tack easily: “We have the flexibility of having largely own-brand products to bring customers great value. This gives us greater control of the production process and helps us to reduce input costs.” 63
    - - Among the 245 products on which Woolworths made price cuts were a 32.8% drop in the price of a two-litre bottle of sunflower oil, a halving of the sour cream price and a 40% reduction in the price of 750 ml sunflower oil. Other significant price cuts were on organic vegetables, home goods and personal care products. In addition, several other promotions were launched, including two-for-the-price-of-three discounts and the R100 meal deals, which included discounted items marketed as full meals for a family of four consisting of a main meat dish, a ready-made vegetable dish and a dessert or bread. (See Exhibit 6.) Sixty-three known-value items (KVIs), including popular non-Woolworths brands, were also competitively priced.
    - - Promotions included Every day the difference – featuring everyday items such as fruit and yoghurt;
      - Gastronomic adventure – featuring ready-made and speciality foods
      - Health – featuring the introduction of organic food;
      - and Reasons to celebrate – featuring flowers and items in gift packaging.
      - These formed the channels through which Woolworths communicated its innovations – which, from July to December 2008 alone, included the launch of 824 new lines. 64
    - - In addition, Woolworths continued to increase its footprint. In 2008, there were eight full-line and 20 new stand-alone food stores, and by June 2009, Woolworths had opened a further six full-line stores and four stand-alone stores.