Woolworth's Restructuring in the Digital Age - Case Study Example

University: The Future of Retail Stores Name: Date: The Future of Retail Stores. Over the recent years, the momentum of sales among most retail stores has fallen significantly. Although contributions to these could be as a result of turbulent economic times and general consumer apathy, it is undeniable that shopping malls are no longer filled with massive crowds as before. Indeed, increasing evidence has shown that there has been a slow but steady shift from shopping in retail stores to preference in shopping online (Baines et al., 2010, p.77). This report focuses on Woolworths Limited, a major retail company and notes on the company its progress, extent of its integration of online shopping in its operations and recommendations on how it can improve its effectiveness by using IT. Woolworths Limited is the largest retail company in New Zealand and Australia by sales and market gains. This retail chain has operations ranging from liquor store, operates supermarkets, consumer electronics, petrol stations, and general and hardware merchandising stores across New Zealand and Australia (Rebecca, 2012, p.17). The fact that Woolworths has employed way over 190,000 people makes it one of the largest employers in the private sector across Australia. The enormous physical presence and the extensive marketing of its retail store has seen the company become very popular in this region. Woolworths began its operations in the year 1924. The company by then was highly innovative, being the pioneer store in the world to print customers’ receipts using cash registers. The retail store began with a food store, further expanding to incorporate a chain of supermarkets. In the years following the early 1990’s, Woolworths invested heavily in making acquisitions, with the acquisition of 125 Safeway stores that made it the largest Australian food retailer. Woolworths also engaged in numerous partnerships. Key among them involved partnership with the petroleum company Caltex, whereby the company would rebrand the Caltex petrol stations as Caltex Woolworths, and would essentially be involved in supply of groceries in these petrol stations. Recently, in 2009, the Company further announced a joint venture with a home improvement chains company that oversaw the opening one of the store, Masters, in 2011 (Humphrey, 2011, p.136). The joint venture was made with an aim of opening one hundred and fifty stores within the next five years, that is, by 2016. As at 2013, the company had managed to open 29 operational store following the partnership(Robb, 2013, p.56). The shopping experience at Woolworths is incredible. Through the company’s multi-option retailing concept, consumers get a rare chance to choose from a wide range of high quality as well as fairly priced goods and groceries (McFall, 2010, 69). The Company has for the past two years managed to improve the customer shopping experience by offering discounts on up to one third of the items sold through their stores. These price cuts, coupled by the wide variety of choices in their supermarket have made the Woolworths retail store very popular among shoppers across Australia. Moreover, the company has made concerted efforts in promoting its fruits and vegetable product through innovative strategies such as partnership with the Warner Bros Company so as to make children fruit packages more attractive to the children through use ofLooney Tunes characters on their products. Through producing pre washed and freshened and ready to roast, bake or steam vegetables, the Woolworths Company won the Product of the year award. Over the last two years, the company has increased its online presence and this has been reflected through a remarkable increase in its online operations by 40%. Besides, the company projects to hit over $1 billion in its online sales by the end of 2014. Further, Woolworth’s statistics indicate that over 90% of all households have access to Woolworths’ supermarket online offers. These offers have been monumental in tremendously increasing Woolworth’s customer base over the last few years. Since the incorporation of the company and its supermarket chain stores, the corporation began to observe that a good number of shoppers loved carrying out their shopping in the stores. However, with the rapid development of the IT industry, it was necessary to reconsider the shoppers who prefer to conduct shopping at the comfort of their own homes. The emergence of online shopping has been an emerging trend in e business and studies show that by 2020, all retail stores will have incorporated online shopping into their systems (Robb, 2013, p.54). One of the major factors that have kept Woolworths at the helm in the retail store business has been its consistent insistence on providing value on its products (Gans, 2011, p.62). Undoubtedly, Woolworth has not been left behind on the online marketing and sales of its products. Through continued increase in momentum on the liquor and food divisions the company has seen increased sales, market shares, and earnings before income and tax. The Woolworths has been a leading liquor destination for a large number of its consumers for both its in-store and online customers. Furthermore, the company in the year 2013 rebranded over 475 Woolworths liquor sites to BWS sites. Woolworths has been able to save $61 million in the last one year through fine-tuned ordering systems whereby the company engages in stock rotation and offering discounts on foods that are nearing their best before dates. Moreover, through an online program marked as Love Food, Hate Waste, the Company has grown popular in Australia for championing against food wastage (Mabaya, 2011, p.73). Inevitably, the issue of ethics is paramount in every business. In the supply chain, there is the need to engage in ethical sourcing policy. This deals with environmental compliance, working conditions, and corruption and labor rights (Botha et al., 2008, p.51). Woolworth’s operations, through their supply chain management have tried as much as possible to engage in business with compliance with International Labor Organization. Moreover, encouraging customers through their online platform to engage in ethical and environmentally friendly practices has won it wide accolades. These endeavors to be in line with the labor laws and other statutory requirements have been instrumental in ensuring the company’s continued presence and retention of its top management as well as junior staff (AIHW, 2012, p.75). In addition to this, Woolworths, through partnership with a mobile app developer, has been able to launch an app that would facilitate online buying. So far, the app has recorded over 2.3 million downloads. Through this app, customers have enjoyed the privilege of being able to shop at work, while commuting on a bus, and even when away on a holiday. In addition, this comes with total convenience and choices for the customers by incorporating technology to make the shopping experience more enjoyable. Moreover, in a bid to expand further on their physical stores, Woolworths recently acquired Ezibuy, which has been a top direct retailer of home wares and apparel in New Zealand and Australia. The company has also made positive steps in accelerating growth in its Internet Technology infrastructure through acquisition of a 50% stake at Quantium. Quantium is a business that provides consumer insights that ultimately depict consumer preferences and trends. Essentially, Quantium is a data driven Strategy Company and this acquisition by Woolworth in 2013 was seen as pivotal in enhancing extensive market research on what the company should anticipate as the market changes over time in the retail store business (Robb, 2013, p.50). The company has continuously delivered substantial cost reduction especially on the liquor and food divisions. This has been primarily enhanced by the productivity improvement programs that the retail store has been actively striving to make more efficient since the program embarked on lowering the costs of production as much as possible. It is interesting to note that Woolworths, even with its large customer base, has been able to integrate home delivery into its services (McKean, 2012, p.88). Additionally, with the increase on the online sales, the company has been in a position to open up click and collect stores that have further boosted online sales figure. The click and collect facility enables customers to order grocery purchases and collect them at the most convenient location. Even with the appreciation of the huge leaps that Woolworths has taken over the years to remain competitive, there is fundamental need to recognize that customers are undoubtedly moving away from physical retail stores. The convenience that comes with online buying, known as e commerce, cannot be overstated. With the innovations that have come with computerization, manufacturing innovations, supply chains developments, and crucial changes in the consumer lifestyles, the entire face of retailing has consequently been altered. This digital transformation is more inclined towards an entirely fresh approach to traditional retailing concepts of merely putting items in shelves(Gans, 2011, p.104). Ultimately, the question of where technology comes in with regard to the traditional brick and mortar businesses, it is not sufficient to state that technology will lead to the close down of these tradition physical stores (AIHW, 2012, p.56). Rather, these two innovations should work seamlessly to create a synergy that will eventually bring about a much better industry. However, in as much as Woolworths is doing a commendable job in pushing for this integration in their company, a lot needs to be done. First, the company should consider aggressively marketing the multi-option approach (Baines et al., 2010, p.49). This option would ultimately provide new opportunities for growth, and tremendously facilitate further increase in online sales. In a similar fashion, the company should partner with other phone manufacturers such as Blackberry and Nokia to app developers so as to capture clients on these platforms. Effective management requires that the managers bring on board as large a segment of the consumers as possible. In addition to this, Woolworth should make a deliberate effort to conduct intensive market research which basically involves gathering as much information as possible concerning target customers and markets. Finally, even as sales shift towards the online shopping, prudent measures should be put in place to motivate customers to come out from the comfort of their computers homes once in a while. Measures such as scheduling exhibitions, longer opening hours and security in the stores will ultimately foster the much needed blending of ensuring business survival of physical retail stores while developing the online platform (McKean, 2012, p.103). REFERENCES AUSTRALIAN INSTITUTE OF HEALTH AND WELFARE (AIHW). (2012). Australia's food & nutrition 2012. Canberra, Australian Institute of Health and Welfare BAINES, P., FILL, C., & PAGE, K. (2010). Marketing. Oxford, Oxford University Press. BOTHA, J. A. R., BOTHMA, C. H., & GELDENHUYS, P. (2008). Managing e-commerce in business. Cape Town, South Africa, Juta. GANS, J. (2011). Principles of economics. South Melbourne, Vic, Cengage Learning. HUMPHERY, K. (2011). Shelf life: supermarkets and the changing cultures of consumption. Cambridge [u.a.], Cambridge Univ. Press. MABAYA, E. (2011). Case studies of emerging farmers and agribusinesses in Australia. Stellenbosch, Sun Press. MCFALL, B. (2010). How to make money while you sleep a 7-step plan for starting your own profitable online business. Richmond, Vic, John Wiley and Sons. MCKEAN, J. (2012). Managing customers through economic cycles. Chichester, West Sussex, John Wiley & Sons. REBECCA THURLOW(2012), ‘Woolworths Profit Drops On Restructuring’ Restructuring Retail Stores In the Digital Age,vol. 25, no. 3, pp.14-23 Available from: Proquest [Feb. 29, 2012]. ROBB M. STEWART(2013), ‘Woolworths Home Improvement Venture Struggles’, Higher Wages Lower Margins, vol. 16, no. 8, pp.47-59. Available from: Proquest [18 July 2013]. Read More