Woolworths’ customer focus driving comparable-sales growth

Woolworths recorded new highs in voice-of-the-customer (VOC) scores in the September quarter and maintained growth in customer transactions, driving comparable-sales growth of its Australian food division for the quarter despite a material increase in deflation driven by fruit and vegetables.

Sales in the food division increased by 4.7 per cent to $9.6 billion for the 14 weeks of the first quarter of FY18 compared with the previous year. Comparable sales increased by 4.9 per cent.

Woolworths says comparable sales growth was driven by continued improvement in comparable transactions (up 4.6 per cent) and comparable-item growth per basket of 1.4 per cent, resulting in volume growth of six per cent, despite higher levels of deflation during the quarter.

VOC scores improved significantly over the same quarter in FY17 and have improved further on Q417. Overall customer satisfaction now includes store and online and increased to 79 per cent in the quarter, while the store-controllable VOC score has increased to 83 per cent. Record scores were achieved in fruit and vegetables, time in queue, team attitude and availability.

Woolworths says the success of its ‘Earn and Learn’ customer program in August and September led to its highest ever community brand scores.

Average prices declined by 2.4 per cent due to material price reductions in fruit and vegetables compared with the same quarter last year. Major price reductions occurred in key lines such as tomatoes, lettuce and berries due to favourable growing conditions. Woolworths also added about 290 products to its ‘Price Dropped’ and ‘Always’ programs since financial-year end, taking the total to about 3,800. The retailer says price perception has continued to improve but remains an opportunity.

Woolworths ended the quarter with 1,003 supermarkets and Metro stores. Five supermarkets were opened and its three remaining Thomas Dux stores converted to Metro during the quarter, with 28 stores now branded Metro. Woolworths also completed seven renewals and 11 upgrades during the quarter.

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