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Woolies lowers food prices

Woolworths ‘invests’ R1bn in lowering food prices

Covid and lockdown have elicited much business rethink, with retail giant Woolworths announcing it’s aiming for a bigger share of South Africa’s lucrative fresh food and grocery market, by committing “to invest R1 billion in its prices” over the next two-to-three years – 75% of which will go into lowering food prices.

The group announced the move last week, maybe not so coincidently to coincide with the release of the interim results of its fellow Cape Town-based competitor Pick n Pay.

However, its food business expansion is likely to also be watched closely by Shoprite Group, which has been investing heavily in its upper market Checkers chain to take on both Woolworths Food and Pick n Pay over recent years.

Woolworths said that “a R750 million investment” is planned in its foods business in order to offer its products “at great value to customers” every day. This includes foods like fresh chicken, which is a staple protein meat in the country.

The investment in its food business makes sense, considering that it is Woolworths’s best performing division.

“While this investment will initially be most visible in our poultry products, we have also applied more promotions on everyday basics across groceries, household and personal care to be more affordable to more customers,” says Woolworths SA CEO, Zyda Rylands (left).

“Our price investment journey over the next three years will help us help our customers who are deeply concerned about the economic impact of Covid-19 on the country and their budgets.

“Through this effort we will be able to offer the Woolies exceptional quality products our customers love at more accessible prices,” she adds.

Its investment in fashion, while smaller, is also noteworthy, considering the trend of South Africans opting for lower-priced casual wear in the face of Covid-19, which is seeing more people working from home or homeward bound.

Competition does seem to be heating up a bit… We’ve seen the very aggressive rollout of Shoprite’s Sixty60 offering. Today Woolworths announcing they’re going to throw R1 billion at prices. That seems like a direct declaration of war?Bruce Whitfield, The Money Show host on Radio 702

“Over the last few years, we have been on a journey to invest in the prices of key product lines and categories to ensure we continue to provide our customers with the value they have come to expect from us,” notes Rylands.

“The Covid-19 pandemic has emphasised this need and therefore accelerated our price journey, because of the significant impact it has had on our economy and on the lives of our customers and their families. Because we know our customers are under pressure, we are investing even more in our prices to ensure we remain relevant and accessible, while not compromising on our quality,” she stresses.

“Through the crisis, we have focused on identifying further efficiencies in our business as well as in our value chain, to find opportunities to be more effective and cut costs,” she adds.

“We have worked very closely with our suppliers and partners to ensure that we realise these sustainable and mutually beneficial operational improvements. We are pleased to be able to pass most of the savings of these efficiencies onto our customers,” says Rylands.

Source: Woolworths; MoneyWeb.co.za

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