Woolies R20m supermarket to start trolley battle

The company is trying to woo its well-heeled customers into buying more than just meat and fresh produce from its stores, by introducing a variety of product categories and bulk value buys with its large scale supermarket strategy that will see it stock products never found in a Woolies food store before, such as pantyhose and pool chemicals.

"We see 10 or more of these [stores] in a relatively short space of time," CE Ian Moir said.

It was Moir who infamously said in February: "It breaks my heart when I see a Pick n Pay trolley outside our store, while customers are shopping with a basket for produce inside. We are going to change that."

Woolworths' tactic of converting customers from basket shoppers to trolley shoppers comes at a time when Pick n Pay's turnaround strategy is still in its infancy.

The beleaguered grocer is trying to get its house in order after facing a barrage of criticism for its lacklustre performance over the last few years.

"The company took its eye off the ball many years ago in a number of areas, notably in general merchandising, when it stopped the rollout of its Hypermarket chain ... they also ignored the global trend towards centralised distribution, and as a result are now running a marathon at a sprinter's pace in order to make up for lost time," Chris Gilmour, analyst at Absa Asset Management Private Clients said.

Although Pick n Pay has made sizable investments in its loyalty programme, centralised distribution system and a specialist category buying function to improve operating efficiencies, it is believed that the group's problems are deep-seated and 2014 will be the earliest before any meaningful sustained improvements are manifested in SA's second largest retailer.

And while Pick n Pay tries to play catch-up, Woolworths is on a mission to change mind-sets.

"We are viewed as a luxury top-end top-up shop, and that's what we really want to change. We want to drive a main shop with brands priced equal to the market. We want to have tiered product and more bulk where customers can do more of their daily and weekly shop," Zyda Rylands, MD of Woolworths Foods said.

According to Gilmour, Woolworths was making a very aggressive statement.

"I think it's incredibly positive. Four or five years ago the typical number of stock-keeping units (SKUs) in Woolies was 3,500-4,000, now it's almost double that, and they are going to expand their offering quite considerably.

"These guys have 9-10% market share they are big enough to get the kinds of discounts so they can have a reasonable pricing proposition for customers," Gilmour commented.

The 3,200sqm Woolworths concept store in Bryanston features 'green' design elements such as energy efficient lighting and stocks both fresh produce and groceries. It boasts a butchery that marinates meat on the go, a bakery, a fish counter and a "call & collect" service where customers can phone in with their shopping lists and pick up their order.

The biggest constraint facing Woolworths with its supermarket rollout will be securing real estate.

"Sites you can get, but the right ones are difficult. We want to try and do two things: greenfields - like the Nicolway store, or we're going to take some of our existing stores and expand them where we already have a customer base.

"That is a painful process though, because customers will have to live through all of the renovation. But these are supermarkets with a difference - they have the mind of a supermarket and the soul of a deli," Rylands told I-Net Bridge/BusinessLIVE.

The message from Woolworths is clear: I see your basket and raise you a trolley.