Woolworths Group (Australia)

This article is about the Australian company Woolworths Limited. For other retailers of similar name (including F.W. Woolworth and its associated companies), see Woolworth's.

Woolworths Limited

File:Woolworths Limited.png
Company type	Public (ASX: WOW)
Industry	Retail
Founded	1924
Headquarters	1 Woolworths Way, Bella Vista NSW, 2153, Sydney, Australia
Key people	James Alexander Strong, Chairman Michael Luscombe, CEO
Brands	Woolworths Supermarkets Safeway Supermarkets Food For Less Supermarkets Flemings Supermarkets Woolworths Metro Caltex Woolworths Caltex Safeway Woolworths Liquor Safeway Liquor BWS Dan Murphy's Big W Discount Department Stores Dick Smith Electronics Dick Smith PowerHouse Tandy Electronics
Revenue	$37.734 billion AUD (2006)
Net income	$1.015 billion AUD (2006)
Number of employees	approx 175,000 (2006)
Website	www.woolworthslimited.com.au

Woolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. Woolworths Limited is currently:

• The largest retail company in Australia and New Zealand by market capitalisation and sales
• The largest food retailer in Australia and New Zealand
• The largest takeaway liquor retailer in Australia
• The largest Hotel and Poker Machine operator in Australia

Stores

Woolworths Limited operates in Australia through several retail banners:

Supermarkets

• Woolworths - The company's premier supermarket chain, which operates in every Australian state and territory except Victoria. In Victoria, the supermarket is named "Safeway" but is still owned by Woolworths Supermarkets.
• The supermarkets are often colloquially known as "Woolies" and have used the slogan 'The Fresh Food People' since 1987.
• Flemings (supermarkets) - Group of four supermarkets located in Sydney (the remnants of a chain purchased in the 1960s).
• Food For Less - Woolworths also operates under this brand in some areas

Convenience Stores

• Woolworths Metro - Inner-urban convenience stores located in the key metropolitan areas of Sydney and Brisbane selling a range of pre-prepared meals for the 'time poor' customer. Woolworths Metro was also the name of Woolworths' flagship 5-storey store at Town Hall in Sydney until 2003 when it reverted back to the Woolworths brand.

Liquor

• Woolworths Liquor - Liquor stores which are either attached or located within Woolworths Supermarkets (trades as Safeway Liquor in Victoria).
• BWS - Liquor stores located away from the company's supermarkets.
• Dan Murphy's - Large liquor barns often referred to as Liquor Supermarkets. Dan Murphy's is one of the company's best growth performers, with plans for up to 100 stores (from the current 55) to exist within the next 2-3 years.
• ALH Group - Hotel and Poker Machine operator, which is 75% owned by Woolworths Limited.

Petrol

• Woolworths Caltex - Petrol stations located both free standing and adjacent to supermarkets (trades as Safeway Caltex in Victoria).

General Merchandise

• BIG W - Discount Department Store chain, which sell a wide range of general merchandise. BIG W represents about 10% of group sales, and has experienced tough times recently due to constrained discretionary spending.

Consumer Electronics

• Dick Smith Electronics - Sell a wide range of hobby electronic products as well as consumer goods such as computer products.
• Dick Smith Powerhouse - Big box Dick Smith stores with a focus on consumer entertainment products. Similar to the electrical and computer parts of Harvey Norman and Clive Peeters.
• Tandy Electronics - Similar to Dick Smith Electronics stores, but smaller and lacking the hobbyist components.
• Croma/Tata Group Venture - In 2006 Woolworths and the Tata Group of India announced an electronics retailing venture on the subcontinent. Due to the legal framework, foreign companies are prevented from operating retail businesses in India. Due to this, Woolworths will act as a wholesaler to the Tata Group. The stores will be based on the Dick Smith Powerhouse format.

Former chains

• Woolworths Food Fair - The name given to the company's growing food-retailing interests in the 1960s to differentiate them from the variety-based stores. This name was absorbed when the decision was made to use the original Woolworths name for the company's food stores and supermarkets instead of its variety stores.
• Woolworths Variety - The name given to the company's traditional variety stores to differentiate them from the company's food-retailing interests, when the decision was made to use the original Woolworths name for the company's food stores and supermarkets instead of its variety stores. These variety stores were progressively divested as Woolworths focused on food retailing and developed large-scale discount department stores.
• Woolworths Family Centre - Woolworths opened its first hypermarket at Booval, near Ipswich, Queensland in November, 1969 under the Big W name. A second hypermarket was opened in 1970 in Indooroopilly, Brisbane under the Woolworths Family Centre name. The early popularity of these stores led to Woolworths establishing hypermarkets around Australia using the Woolworths Family Centre name. However the concept failed to perform, and the hypermarkets were re-established as separated Woolworths supermarkets and Big W discount department stores in the late 1970s/early 1980s.
• Crazy Prices - discount variety store chain, which sold discounted merchandise. These stores were sold to (and formed part of) rival Go-Lo in 2001, although the last store with Crazy Prices branding didn't close until 2005 (in Port Macquarie. Its slogan was "The Bargains are Better".
• Rockmans - women's clothing retailer acquired by the group in 1960 and was a major operating division until its sale in 2000.

New Zealand

The Company also operates in New Zealand under the following banners:

Progressive Enterprises:

• Woolworths - Full Line Supermarkets
• Foodtown - Full Line Supermarkets
• Countdown - Discount Supermarket chain
• Woolworths @ Gull - Petrol and Convenience Store chain

Dick Smith NZ:

• Dick Smith Electronics - Sell a wide range of hobby electronic products as well as consumer goods such as computer products.
• Dick Smith Powerhouse - Large Dick Smith stores with a focus on consumer entertainment products.

Formats

Woolworths

Main article: Woolworths Supermarkets

Safeway

In Victoria, Woolworths trades under the name Safeway. Safeway Inc. entered the Australian grocery market in 1963 with the purchase of three Pratt Supermarkets. The subsidiary Safeway Australia was created, and by 1985 the chain had grown to 126 supermarkets trading under the Safeway banner across Victoria, New South Wales and Queensland. The Australian head office and distribution centre was (and still is) located on Wellington Road, Mulgrave, Victoria.

Acquisition by Woolworths

In 1985 Australia’s second largest supermarket operator Woolworths Limited successfully acquired Safeway Inc. Australian interests. In the agreement Woolworths Limited acquired all Safeway stores and the naming rights in exchange for a 19.99% interest in Woolworths Limited (which has since been sold). This transaction pushed the group’s grocery market share above Coles, giving Woolworths Limited the title of Australia’s largest supermarket operator (which it still holds to this day).

Safeway stores in New South Wales and Queensland were re-branded as Woolworths Supermarkets. However Safeway stores in Victoria retained their name, and all Victorian Woolworths stores were transferred to the Safeway banner. Mr. J.W.R. Pratt, Chairman and Managing Director of Australian Safeway Stores and Mr. P.A. Magowan, Chairman and Chief Executive Officer of Safeway Stores Inc (USA) were also appointed to the Woolworths Board.

In 1987 Woolworths and Safeway Supermarkets launched “The Fresh Food People” campaign, adopting a uniformed company logo and marketing strategy, which are still in use today 20 years later.

Today

Safeway Australia continues to trade today as Woolworths Supermarkets Victorian Division. In 2007, aside from 2 Woolworths supermarkets trading in Mildura all supermarkets in Victoria presently trade under the Safeway banner. During the 1980s and 1990's the Mildura stores moved from Woolworths to Safeway and back again, while the Karingal Woolworths store remained so until the late 1990s. The brand has also followed Woolworths Supermarket’s progression into liquor trading as Safeway Liquor, and into petrol trading as Caltex Safeway. At the end of 2005 there were 180 Safeway Supermarkets trading in Victoria.

Safeway’s Future

Since 2000 there has been much speculation in the market that Woolworths Limited is planning to absorb the Safeway stores under the Woolworths banner. The main reason for this consideration is said to be a cost-cutting measure, as currently the company pays many duplicated expenses such as advertising. One large concern, though, is the possible loss of reputation and consumer identification, especially considering that Victoria is the second-largest retail market in Australia.

In the early 2000s, the company's supermarket interests in the smaller state of Tasmania, which traded under Purity and Roelf Vos, were progressively re-branded as Woolworths Supermarkets (Tasmania and Victoria were the only states where the Woolworths name was substituted over the entire market). The transition took place through an extensive advertising campaign aimed at preserving the company’s reputation and market share. The exercise was closely watched by the company and the market, and was used as a comparison to the possible effects of a name change in Victoria.

Initially the name transition had little, if any, effect on the performance of the Tasmanian supermarkets and has not, to this date, affected Woolworths Supermarkets' growth in the state.

Food For Less

Main article: Food For Less

Flemings

Main article: Flemings (supermarkets)

Flemings are a chain of small, innovative stores in Sydney acquired by Woolworths in June 1960. The first Flemings stores were opened in 1930 by Jim Sr. and George Fleming. It initially traded under the name "E.L. Lakin". Following World War II, the business boomed and the name changed to "Flemings Food Stores". By the time Flemings was sold out to Woolworths, there were 55 stores operating under the "Flemings" banner in Sydney. The Fleming family continued operating the chain through Woolworths for the next 10 years before they had begun operating the now-defunct Jewel Food Stores supermarket chain. Many Flemings stores were re-badged as Woolworths or Woolworths Metro or have since closed. Four Flemings stores still exist (despite now being internally known as Woolworths) at Bexley North, Jannali, Pendle Hill and Umina Beach (on the Central Coast). The current Flemings logo was launched in the early 1990s, although it is no longer internally used.

Woolworths Metro

Main article: Woolworths Metro

In 1997, Woolworths launched the Metro concept in Sydney, converting their premier variety store for 32 years to this format with the lower ground floor specialising in a large range of ‘prepared meals’ to cater for the increasing numbers of city dwellers, a kind of convenience store. It also became the name of convenience stores in key metropolitan areas (where the name "Metro" comes from). Subsequent stores opened in Coogee (ex-Flemings store), Boronia Park and West Pennant Hills in Sydney and Ascot in Brisbane. Stores that have since been sold off or re-branded are Newtown, Waterloo and its Sydney city store (all in Sydney). There are currently 4 stores operating in Australia. Its major competitor is Coles Central.

History

Woolworths store in the heart of Sydney (formerly Woolworths Metro)

Woolworths opened its first store, the Woolworths Stupendous Bargain Basement in the old Imperial Arcade in Pitt Street, Sydney on December 5, 1924. Its nominal capital was just £25,000 and although 15,000 shares were offered to the public, only 11,707 shares were subscribed for by 29 people, including the 5 founders - Percy Christmas, Stanley Chatterton, Scott Waine, George Creed and Ernest Williams. The name on the draft prospectus drawn up by Cecil Scott Waine was "Wallworths Bazaar" - a play on the F.W. Woolworths name (the owner of the Woolworths chain in the US and UK). However, according to Ernest Robert Williams, Percy Christmas dared him to register the name Woolworths instead, which he succeeded in doing after finding out the name was available for use in New South Wales. Accordingly, the Woolworths Limited company in Australia has no other historical relation to the F.W. Woolworths Company in the USA. The new Woolworths store was innovative, it was the first variety store in the world to use cash registers to print receipts for customers.

Christmas also set up a New Zealand general merchandise operation in Wellington in 1929. Woolworths New Zealand opened its first food store in Auckland in 1956, and supermarkets in 1971. Woolworths New Zealand was sold to the company that is now LionNathan in 1979 and was later sold to Dairy Farm International in 1990, now owned by Progressive Enterprises, a subsidiary of Foodland Associated Limited of Australia. In 2005 Woolworths Limited and Metcash Holdings(IGA) agreed to purchase a demerged Foodland in which Progressive Enterprises and 23 of Foodland's Action brand supermarkets came under Woolworths' ownership. This acquisition brought total store numbers to near 750 in Australia.

During the late 1920s, the company grew with a second store in Sydney and opened stores in Brisbane and Perth and grew further in the 1930s, despite the depression, until by the end of 1933 when Woolworths had expanded to 23 stores. In 1933, the first store in Melbourne was opened. On April 1 1936, the company bought eight stores from Edments Ltd and opened its first store in Adelaide.

World War II slowed the growth of Woolworths and both the Australian and United States military used Woolworths' warehouses in Sydney for storage. After the war however, expansion was rapid and in 1955, Woolworths opened its 200th store in the Civic Centre in Canberra (since closed down). At this point Woolworths was still mainly a variety chain and had not moved into the food sector that it uses the "Woolworths" brand for today. This move began in 1955 when it opened its first supermarket at Beverly Hills south-west of Sydney. The company bought the Rockmans chain of women's clothing stores in 1960.

In the 1970s, the company started to open the first Big W discount department stores and the slow removal of many variety products from the supermarket and variety stores began, this process finished in 1989 when the last of the Woolworths Variety stores was closed (except the one in Rundle Mall) and the "Family Centres" were split into separate Big W and Woolworths supermarket stores. Woolworths' acquired the Dick Smith Electronics consumer electronics chain in 1981 and later expanded the consumer electronics arm of its business with the purchase of the Tandy chain in Australia from InterTan Inc in 2001. Conversely, the company sold the Rockmans chain in 2000.

In 1985 the acquisition of the 126 Safeway stores in eastern Australia made Woolworths the largest food retailer in Australia. Safeway stores were located in Victoria, New South Wales and Queensland and included Food Barns in Queensland and Northern New South Wales. The stores were acquired following an agreement whereby Safeway received a 19.99% interest in Woolworths Limited. All Woolworths and Safeway supermarkets in Victoria effectively traded under the one Safeway brand from then onwards while all of Safeway's Food Barns in Queensland and New South Wales became part of Woolworths.

Around this time, the supermarket chain had run 8 small supermarket chains including the Queensland-based Food For Less and the Sydney-based Flemings, which have both survived to this day.

In 1989, the company was acquired by Industrial Equity Limited (IEL) and remained a wholly owned subsidiary until 1993 when it was floated in the biggest share sale (at that time) in Australia's history.

In 1996, Woolworths entered the petrol market, initially with wholly owned "Plus Petrol" outlets located in shopping centre parking lots. In 2004, as part of a loyalty program aimed at attracting customers to supermarkets through the lure of 4 cents a litre discounts, Woolworths entered into an agreement with Caltex to co-brand some Caltex outlets as Woolworths petrol. These joint venture outlets are supplied with fuel by Caltex and with groceries by Woolworths, and accept Woolworths cards and discounts dockets.

In 1999, Woolworths began a joint venture with the Commonwealth Bank called Woolworths Ezy Banking. This venture is now being scaled back, but this has not stopped the company from pursuing other financial services initiatives - in 2005 the company reached an agreement with the ANZ Banking Group to supply ATMs at Woolworths locations.

In 1997, Woolworths opened their first Metro store in Sydney, converting their premier variety store for 32 years to this format with the lower ground floor specialising in a large range of ‘prepared meals’ to cater for the increasing numbers of city dwellers, a kind of convenience store. Subsequent stores opened in Coogee, Boronia Park and West Pennant Hills in Sydney and Ascot in Brisbane. Stores that have since been sold off or re-branded are Newtown, Waterloo and its Sydney city store (all in Sydney).

With growth opportunities in other sectors becoming limited, Woolworths started to expand into liquor businesses. A peculiarity of the licencing laws means that retail outlets in Queensland can only be operated by a hotelier - which each pub entitling the operator to three retail liquor outlets within a certain distance. This lead both Woolworths and its competitors to look at the hotel industry as a future area of expansion.

Woolworths formed a joint venture (called Bruandwo) with Bruce Mathieson, an experienced pub operator, and this venture purchased hotelier Australian Leisure and Hospitality Group in 2005. In late 2005 the ALH Group also acquired the Taverner Hotel Group and the Bruce Mathieson Group further cementing its position as Australia's premier liquor retailer, with a current portfolio of 250 hotels.

The hotel business, run by the ALH Group, is 25% owned by Bruce Mathieson and 75% owned by Woolworths Ltd.

Stats provided during the acquisition of the Taverner group showed that over one third of sales are made up of gaming / poker machines. The number of poker machines owned by Woolworths and Bruce Mathieson after ALH acquisitions came to 10,722.

In 2006 the company has had three major events: (1) In June Woolworths opened a buying office in Hong Kong to cut out the intermediary in sourcing foreign produced items; (2) The company announced a venture with the Tata Group in India to introduce the Dick Smiths Electronics stores to that country; and (3) in September the company announced it had taken a 10% strategic stake in the New Zealand entity The Warehouse Group.

External links

• Official website