Sunday, August 14, 2022

E-commerce drives growth in Woolworths’ Q3 results

Woolworths has propped up in-store sales with a surge in online sales following changes in post-pandemic consumer shopping habits.

Announcing Woolworths Groups third quarter results on April 29, CEO Brad Banducci says online sales have continued to grow strongly since the start of the pandemic.

“Group e-commerce sales have continued to grow strongly, up 64.2% in Q3 to $1.3 billion,” he said.

“In Australian Food, WooliesX e-commerce sales increased by 90.5% to $878 million with penetration of 7.9% compared to 4.1% in the prior year and 7.7% in H1 F21.”

Customer digital engagement remains a priority for the Group. Mr Banducci announced average weekly traffic to Woolworths’ digital assets increased by 48% to 12.4 million visits per week in the quarter. Woolworths also made several improvements to its websites and apps to increase convenience for customers including enhancements to the Woolworths digital catalogue.

In-store shopping behaviour normalises

In the Australian Food business, total sales declined by 0.7%, following an increase of 8.2% for the first seven weeks of the quarter. Mr Banducci says sales performance was impacted by lower item growth and a reduction in average prices, particularly in March.

“The reduction in prices reflects deflation in categories like fruit and vegetables, category mix changes and cycling the temporary reduction in promotions in March last year,” he said.

The results also indicate the continual normalisation of customer shopping behaviour.

“While food customers are still shopping less frequently, the growth in the number of items customers put in their baskets is slowing,” Mr Banducci said.

“Customers are also shopping more on weekends, state-based performance is becoming more balanced and there is less divergence in trading across the fleet, other than in CBD and transit locations.”

Investing in experience and fulfilment

During the quarter, Woolworths made progress on “creating better experiences for customers and increasing efficiencies” across all its ‘X’ businesses, says Mr Banducci.

He highlighted the launch of micro-fulfilment technology in New Zealand in the quarter, with two sites opening.

“Together with Carrum Downs in Victoria which opened in October last year, we now have three micro-fulfilment eStores in partnership with Takeoff Technologies. A fourth facility will be opened in Maroochydore, Queensland in August.”

On Tuesday, Woolworths announced plans for its first mid-size automated customer fulfilment centre. To be built in Auburn, Sydney, (subject to approval), the facility expected to be operational by 2024.

The facility will be built in partnership with Knapp with a capacity of up to 50,000 orders per week.

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