16 Feb 12 Woolies to open full-line supermarkets
Upmarket retailer Woolworths will try to woo its well-heeled customers into buying more than just meat and fresh produce from its stores by introducing more categories and bulk value buys in its new full-line supermarkets.
The company, which has a market capitalisation of R34.8 billion will open its first large scale supermarket in April at the Nicolway Bryanston shopping centre in Johannesburg. This is a hop, skip and jump away from rival Pick n Pay’s R160-million flagship store, “Pick n Pay on Nicol” which opened in 2010.
“We’re going to concentrate on the customers we’ve got. We’re going to get them to spend more with us and maybe we’ll even attract those LSM 8-10 customers who are shopping in Pick n Pay and Checkers,” CEO Ian Moir said on Thursday.
Moir added that its supermarket strategy was not a knee-jerk reaction to Pick n Pay, but a template for the roll-out of a particular type of model that was right for Woolworths.
“We see 10 or more of these [stores] in a relatively short space of time, the only constraint to these will be getting the real estate. So we already have three or four of these sitting and waiting to run,” he said.
According to Absa Investments analyst Chris Gilmour Woolworths was making a very aggressive statement.
“I think it’s incredibly positive. Four or five years ago the typical number of stock-keeping units (SKU’s) in Woolies was 3 500-4 000, now it’s almost double that, and they going to expand their offering quite considerably.
“These guys have 9%-10% market share they are big enough to get the kinds of discounts so they can have a reasonable pricing proposition for customers,” Gilmour told I-Net Bridge/BusinessLIVE.
The favourable foreign exchange impact of a weaker rand, as well as strong growth over the festive season saw Woolworths report a 36% surge in first half profit this week.
Consumers shopped up a storm in December – on Wednesday, Stats SA said December’s retail sales rose 8.7%, from a revised 7.2% in November.
Growth was expected to ring in at 6.7%, according to a survey of leading economists by I-Net Bridge.
Woolworths reported diluted headline earnings per share of 131.3 cents from 96.6 cents previously. Sales rose 11.1% to 14.2 billion rand.
Food sales grew ahead of the market at 11.7%, as the company raised prices an average of 4.8%, and sales of clothing and general merchandise increased 10.1%, as prices increased 7%.