Australia’s biggest retailer, supermarket group Woolworths, is floundering.
It’s share price and market value is down almost 30 per cent since April last year, sales are stagnating and profits are forecast to fall 35 per cent over the six months to December.
The Woolworths business is in a mess, while its competitors Coles and Aldi continue to perform strongly and steal market share.
No doubt, Woolworths is spending millions on expensive reviews and turning to its overpaid executives for answers. But I think – judging by their latest announcement – they have probably missed the point entirely.
Scouring the seven page ASX release, I found plenty of the usual management jargon like “customer metrics” and “change programs” but not a single mention of the word “quality”.
As a regular Woolworths shopper, this says a lot, but is hardly surprising.
We buy most of our groceries at Woolworths, not out of any sense of loyalty or because we like shopping there, but simply because its convenient – there is a grocery store literally up the road from our house.
When we have the time, we prefer shopping at a nearby supermarket extravaganza called La Manna, with its funky cafe, ice-cream and dessert bars and amazing selection of fresh and exotic produce.
Indeed, the demise of Woolworths is a perfect example of having too much market power and becoming utterley complacent.
- The real problem is quality.
My biggest gripe is with the many crappy products sold in my local Woolworths. Often they are dressed up as bargains, but what they really are, are over-priced duds.
Many people may have laughed at the story about the Woolworths scissors that needed a pair of scissors to open the packet but that’s just the top of the iceberg I reckon.
From the packet of mandarins I bought recently infested with so many pips they were inedible to the book-reading light I returned three times because it didn’t work, my general feeling is that finding savings, rather than providing quality products is the overriding motto at Woolies.
Not surprising “value perception” rather than “real quality” is considered a key customer metric in the latest bit of corporate spin.
- Stop confusing customers
I have been caught out on many occasions thinking I have bought a discounted item only to pay more at the till. This is because price labels often don’t relate to the items above them. I am certain this is a deliberate strategy. Another one is promoting items with bright labels, when there is no discount. This is highly annoying. And cutting the price by 10 or 20 cents on an item is just an insult to shoppers.
3. Keep stores properly stocked
Perhaps I am being pedantic, but I am always a bit gob smacked when I stroll up and down the aisles only to find the store has run out of such staples as skim milk and brown rice. How is this possible for a company with access to the best supply chain technology and automated ordering software in the world?
4. Make shopping a bit more interesting.
Woolworths could learn a thing or two from German supermarket giant Aldi, which mixes up the standard grocery items with strange and exotic products that change from week to week. You never know what you will find in an Aldi, but in Woolworths its the same boring stuff, week in and week out.
5. The new rewards program sucks
Woolworths new rewards program is a badly thought out idea and feels like a bit of a fraud. The newly introduced scheme does not pay out loyalty discounts on items immediately as it did in the past. Instead you accumulate them on your rewards card until they reach a certain value.
So instead of immediately getting a bit of reduction in your bill, you have to make multiple visits to the store to get anything back. Whichever marketing genius came up with this idea, should be sacked or at least forced to eat some of those pip-infested mandarins.
So, those are just a couple of ideas for whoever replaces Grant O’Brien as Woolworths CEO.
And here’s another tip for those overpaid Woolies executives. Forget the high-powered meetings, power point presentations and slick marketing campaigns. Get out of your wood-panelled boardrooms and take a stroll instead down some of the aisles of your supermarkets to get the real picture.
And stop and have a word with some of your shoppers, you might learn a thing or two.
Note: I have made changes to this story. The original version made comments about my local Woolworths supermarket staff. This was wrong and I apologise. The problem is with its management.