Advertisement

Value-Driven Customers Boost Woolworths Q3 Sales Results

Reading Time: 3 mins
By Published On: May 3, 20240 Comments

Downward trending customer sentiment and deal seeking has resulted in slowing sales growth for Woolworths in Q3.

Woolworths Group has released its third quarter results, revealing sales have grown just 2.8 percent year on year to $16.8 billion as it battles lowered discretionary spending and increased scrutiny. 

Woolworths Group CEO attributes a noticeable shift in consumer sentiment and shopping behaviours for this result. “Consumer sentiment in Australia and New Zealand has been weak for some time. However, since Christmas we have seen a noticeable change in consumer behaviour as customers have adjusted their budgets and spending following the holiday period which is consistent with Ipsos data which showed that the gap between cost-of-living concerns and other concerns continues to widen. Customers are looking for more ways to save, are cross-shopping more, buying more own brand and buying more product on promotion.”

“When we listen to what our customers are telling us, all customer segments in Australian Food are reporting an increase in concerns around ‘making ends meet’ despite the recent moderation in inflation. Customer segments that are most exposed to the increase in housing costs (families with a mortgage or young singles, couples or families that are renters) report the highest levels of concern. We are also seeing these customer segments make the most use of ways to save such as buying products on promotions, comparing unit prices and making the most of reward and loyalty programs. Own brand penetration also continues to increase with categories such as Pantry, Frozen Foods and Household Care showing the strongest growth.”

Customers are seeking better deals and heading to online channels to get them. Online sales are booming for the supermarket giant with a 17.6 percent growth year on year to $1,931m, with Woolworths stating 86 percent of B2C ecommerce orders were fulfilled within 24 hours across its businesses. 

With digital a priority for the business, and customers seeking discounts, weekly average traffic to Group digital platforms reached 27 million, up 18.4 percent on the prior year driven by increased traffic to the Woolworths app and Everyday Rewards app. Weekly average traffic to Food and Everyday digital platforms reached 19.3 million, up 22.9 percent on the prior year. Woolworths says digital tools including Best Unit Price filter and Shopping Lists are becoming increasingly important in helping customers find value.

BIG W total sales for the quarter declined 4.1 percent to $1,002 million reflecting the aforementioned reduction in discretionary spending. On an adjusted basis total sales declined 4.9 percent. However, BIG W GMV (including 1P ecommerce sales and BIG W Market) increased by 7.6 percent compared to the prior year with BIG W Market GMV sales of $14 million. BIG W app usage continued to grow with one million downloads to date and the layby feature enabled in the app during the quarter. Reflecting the trend towards value-driven customers, Everyday Rewards scan rates increased to 57 percent supported by Member Price events, BIG W app offers and seasonal campaigns.

Woolworths Group CEO, Brad Banducci, said: “It was a challenging quarter across the Group with a noticeable shift in customer sentiment and shopping behaviours since Christmas. Customer metrics and sales growth across the Group have been impacted but encouragingly unit volumes and customer metrics improved as the quarter progressed and we expect more stable trading in Q4.

 “Our focus for the rest of F24 remains on providing value for our customers reflecting their cost-of-living pressures. We expect trading conditions to be challenging for the next 12 months due to competition for customer shopping baskets and as inflation returns to a very low single digit range. However, we are well positioned to manage this more challenging environment through an ongoing focus on our Customers and Team, and our end-to-end productivity plans.”

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

Share this story!

Leave A Comment

Samantha Gopal Podcast
Advertisement
Advertisement
Advertisement
Advertisement