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Woolworths’ R750m ‘investment’ in lowering food prices – chicken too

To ‘be more accessible to more customers’.
Image: Moneyweb

Retail giant Woolworths is 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 on Tuesday, maybe not so coincidently to coincide with the release of the interim results of its fellow Cape Town-based competitor Pick n Pay.

Read: Pick n Pay H1 earnings fall

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.

Gauteng in particular has seen a proliferation of Woolworths Food stores, both at neighbourhood shopping centres and smaller outlets at Engen fuel convenience stations.

“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.

Zyda Rylands, Woolworths SA CEO, says the investment will initially be most visible in the group’s fresh poultry products. Image: Supplied

“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.

The first phase of the plan begins with a R250 million “price investment” in the foods business and R250 million in the fashion business for this financial year. Woolworths said that the investment is being focused on its most popular products.

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.

“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.

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Good news.
Food price inflation is very high.

Indeed. SA needs three things (but not limited to) to contain food price inflation:

More rain

More efficient middlemen/supply chains

Zero farm murders!!

But will it be sustainable ?
And will it be eco-friendly ?

It’s going to be the “BATTLE OF Brit.., err…OF THE CEO’s”.

Zyda Rylands vs Pieter Engelbrecht (Shoprite) vs Richard Brasher (PnP) vs Graham O’Connor (SPAR).

Interesting wordplay below…

The LONG version from Rylands:
“The Covid-19 pandemic has EMPHASIZED 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,”

The SHORT version:
“Our customers are poorer thanks to Covid, so let’s drop our prices a bit”

Your comments always make me laugh, wish to meet you some day 😉

Appreciate the compliments, but I’m HAPPILY MARRIED THANKS

(*lol* …sorry, I couldn’t resist pulling that one)

Blessings,
mpstorm21@gmail.com

W has shown their true colours. Local market not important to them. They would rather lose Rbillions on some grandiose scheme in OZ and then the reward the man who cooked up this scheme with R77million handshake. So R250million is booby prize for locals. I for one wail not shop at W again.

That was no handshake. It was a very firm kick in rear straight and quickly out of the front door….but for R 77m they can kick me as hard as they want to especially if I have lost them billions on an investment that nobody else would pay half for…

Slowing the rampant price inflation in Woolies would be a good start. No mention of maintaining quality though, which is what draws customers able to afford it. Can they really be affordable, good quality and deliver profitable growth?

Now how exactly are they planning on dropping poultry prices? Buying dumped US chickens or is the plan to actually help the supply chain in some manner

Leave the stories….

You people are so confused about making profits.
Dump Oz and make money.
You’re going around in circles. Boring AF

You just gotta love Woollies’ wording: “We’re going to ‘invest’ in lowering prices.” Translation: ‘We were charging so flipping much before, we are now losing customers.’ Ah, PR-speak, isn’t it wonderful!

I usually shop at both checkers and woolies and I’ve noticed a divergence in the premium in pricing where Woolies is more competitive. Yes! Especially CHICKEN(also food) Is this the loss leader?
Soon I won’t have to bother with checkers as woolies is just so much nicer.
Go Woolies!

End of comments.

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