Woolworths CEO looks for customer emphasis as group reports $1.2bn loss

Supermarket giant's chief claims it's starting to see the first stages of improved relations with its customers following efforts to become a customer-first business

Woolworths’ CEO has claimed the embattled supermarket giant is seeing the first stages of improved relations with its customers as it strives to turnaround its business model.

The group reported a net loss of $1.23 billion for the full year to 26 June 2016 off the back of $58.1 billion in sales across continuing operations, a 1.2 per cent dip year-on-year. Underlying earnings for the year in food and petrol were down by 40.8 per cent year-on-year, a reflection of lower sales growth driven by an investment into lower prices as well as a decline in average basket size.

In a statement, Woolworths CEO, Brad Banducci, described the 2016 financial year as one of unprecedented change for the group. He said these decisions have had a material impact on its results but are necessary for its future long-term.

“We are seeing early signs of progress as we work to restore our competitiveness and improve our culture in Australian food,” he said, noting a record voice of customer score for Woolworths in food in June. “We have also addressed significant issues facing the group with the decision to exit Home Improvement and decisive action taken on BigW to reposition the business.”

Like many ASX-listed organisations, Woolworths is hoping a whole-of-business emphasis on the customer will help return to stronger financial performance in the long term. Banducci said top of the group’s five priorities is getting customers to put the brand first and making the right business decisions to enable this to happen.

Alongside implementing a customer-first culture, Woolworths said this requires focus on good prices and the right range of products, great service, and the best fresh goods in the market.

“We are regaining competitiveness with improving customer metrics and sales and transaction growth demonstrating our customers are recognising our investment in lower prices, better service, fresh fruit and veg and improved store experience,” Banducci said.

In its financial report, the brand highlighted overall customer satisfaction scores had also lifted from 68 to 75 between Q3 and Q4 of the financial year.

“Our improving team engagement scores show we are also changing our culture for the better.”

Steps taken to build a better customer culture over the past year include a revision of short-term and long-term performance measures aligned with business transformation, the inclusion of customer and store KPIs in staff incentive plans, a new operating model that’s seen key shared service functions come much closer to the customer, and new tools for stores to provide feedback to the support office.

Woolworths has also launched a new initiative, labelled ‘Woolies Welcome’, that sees all support office team members spending a week in-store in order to get closer to the customer. In addition, work on a new brand strategy with its Essentials and Woolworths brands is well underway.

But there’s plenty of work left to be done. Earlier this week, Woolworths announced the return of a points-based customer loyalty program in order to reward more of its members after experiencing significant backlash on its new rewards offering upon launch last October.

At the same time, 1000 roles are being moved closer to stores and customers, the group stated. Of course, the staff realignment has come at the cost of other functions, and Woolworths today confirmed a further 500 positions are being removed from its support office and supply chain.

Alongside the customer emphasis, Woolworths’ other priorities are to generate sustainable sales momentum in food, evolve its drinks business, empower its portfolio business, and become a leaner retailer.

“While we are seeing early signs of momentum, we are not underestimating the size of the task that lies ahead, especially given the highly competitive nature of the markets in which we operate,” Banducci said. “As we have consistently said, this is a three- to five-year journey.”

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

Building a human-curated brand

If the FANG (Facebook, Amazon, Netflix, Google) sector and their measured worth are the final argument for the successful 21st Century model, then they are beyond reproach. Fine-tuning masses of algorithms to reduce human touchpoints and deliver wild returns to investors—all with workforces infinitesimally small compared to the giants of the 20th Century—has been proven out.

Will Smith

Co-founder and head of new markets, The Plum Guide

Sustainability trends brands can expect in 2020

​Marketers have made strides this year in sustainability with the number of brands rallying behind the Not Business As Usual alliance for action against climate change being a sign of the times. While sustainability efforts have gained momentum this year, 2020 is shaping up to be the year brands are really held accountable for their work in this area.

Ben King

CSR manager & sustainability expert, Finder

The trouble with Scotty from Marketing

As a Marketer, the ‘Scotty from Marketing’ meme troubles me.

Natalie Robinson

Director of marketing and communications, Melbourne Polytechnic

If you think it can benefit both consumer and seller then it would be great

Simon Bird

Why Ford is counting on the Internet of Things to drive customer engagement

Read more

It's a good idea. Customers really should control their data. Now I understand why it's important.

Elvin Huntsberry

Salesforce CMO: Modern marketers have an obligation to give customers control of their data

Read more

Instagram changes algorithms every time you get used to them. It really pisses me off. What else pisses me off? The fact that Instagram d...

Nickwood

Instagram loses the like in Australia; industry reacts positively

Read more

I tried www.analisa.io to see my Instagram Insight

Dina Rahmawati

7 marketing technology predictions for 2016

Read more

The saying is pretty tongue in cheek. It's not saying that marketers are bad people, nor that they don't take themselves seriously. There...

LYF Solutions

The trouble with Scotty from Marketing - The CMO view - CMO Australia

Read more

Latest Podcast

More podcasts

Sign in