Matthew Topp (Business Development Manager): Welcome to Woolworths North Caligul, one of Woolworths’ flagship stores located close to the Woolworths head office. Woolworths is an Australian icon; founded in 1924 it now has over 990 stores. Across the Woolworths group and the Countdown banner in New Zealand, Woolworths employ over 200,000 people. When it comes to scale, Woolworths certainly has that. 95% of the Australian population shop in a Woolworths every year. On average, they shop 39 times and spend $53 per trip. Woolworths buyers are always looking for opportunities to grow their categories.
Pic’s Peanut Butter is a great example of a brand that has helped grow the peanut butter category which was flat 2 years ago. Pic’s has not only brought new shoppers to the category but also helped trade shoppers up. Private label is a very important part of the Woolworths business and now makes up over 20% of their store sales and it fits under the Food Co Division. Steve, could you talk through the importance of supply chain for the Woolworths Group and how manufacturers can help Woolworths within supply.
Steve Donohue (Buying and Merchandise, Woolworths): We are a very customer focused business, but the cogs inside Woolworths is really a big supply chain. So, without it, we can’t do what we do for communities right across Australia. So, it’s an integral part of getting the offer right for customers every day. I think the best examples of where we get it right are where we have the tightest partnership with suppliers. So, we have some suppliers who have co-managed inventory – in other words, they have team members from their team that sit with our team and deeply understand what the data is telling us around what sales look like and what our imagery looks like and work together with us to try and get the stock into the store at the right time. So, nothing happens if you don’t have it to sell, so having it to sell is the most important thing. We’ve done a lot of work in trying to give suppliers as much visibility as we can as far forward as we possibly can to help with production planning and that sort of thing.
Matthew Topp (Business Development Manager): And your group, obviously there’s a lot of innovation that comes through weekly and yearly. What do you see as true product innovation?
Steve Donohue (Buying and Merchandise, Woolworths): On the tracking side of things, well, the results are measured on an innovative product in exactly the same way as are any product, I suppose. The most important thing is having clarity amongst both the buyer and the seller as to what we’re trying to achieve and what are the right metrics to be judging the performance on. Often, it’s things like sales volume or sales dollars, things like profitability. One of the really important things for us with innovation is that we’ve got enough and that’s often the hardest thing, just working out how much you’re going to need of something you’ve never sold before. So, having enough contingency in our plans and, equally, from our side giving the seller enough confidence that we’re going to be there to support them if things don’t work out the way we might have hoped they would.
Matthew Topp (Business Development Manager): Your group has got a supplier of the year – certain awards – can you talk us through what some of the criteria to go through to be recognised as a supplier of the year?
Steve Donohue (Buying and Merchandise, Woolworths): With the benefit of the analytical insights we have today can really hone in on whether products have brought new customers to our stores and whether they grew our total business and that sort of stuff. So, all the usual things, I suppose, are important. Equally, getting stock to us when we need it in a way that’s helpful for customers is critical, but supplier of the year is always about much more than just the numbers. The people that have won supplier of the year in the past are those that have really helped us engage in what the customer needs and really work collaboratively with us to deliver on those customer needs.
Matthew Topp (Business Development Manager): If a product hasn’t been performing up to expectations, what are some of the things that the manufacturers can do with your team to try and drive sales more and get back to where it needs to be?
Steve Donohue (Buying and Merchandise, Woolworths): I think the first thing to know is that the performance of any product should be well understood by both of us as the buyer and the seller. So, we should be jointly judging its performance and there are some pretty self-evident metrics like rate of sales and store-by-store basis and those sorts of things. I think the most important thing to do as a supplier is to understand what your competitors are doing in any given category, because that’s what the customer sees and that’s what the Category Manager is trying to manage the things that are happening around your product in any given category.
So, I think having that depth of understanding and getting access to as much data as you can is really important. In having that data agreeing amongst the Category Manager and yourself what the fairest measure of success looks like. So, you know up front and one of the things that I think is really important for us as buyers is to remove the element of surprise. It’s not helpful for anyone to have that shocking surprise of, “What, it’s not working,” so I’d be asking questions before I heard that it wasn’t working about what are the measures of success that we have.
It’s all the usual things that you’d expect, but when you say “sales” what do we mean by “sales”? What is the sort of hurdle rates that your competitors are achieving in a category that’s going to mean that you’re delivering a result that’s comparable to your competitors in that category. So, I guess, I’d be trying to understand what my competitors were doing and what their results looked like because that’s what’s informing the expectations of the buyer. All of that, ultimately, is a reflection of what customers are doing in-store. So, understanding the customer and understanding the competitor is where it all starts – which is what we always try to do as a retailer.
Matthew Topp (Business Development Manager): There’s three key areas for dealing successfully with Woolworths. 1) Having customer lead product innovation backed up by insight to ensure your product is growing the category. 2) Exceptional supply and service to ensure your product is delivered in full, on time, every time; and 3) a brand story that is relevant to Woolworths shoppers supported by a communication strategy both in and out of store. If you’d like to find out more about entering the Australian market or growing your presence here, please visit the NZTE website.