• In its latest trading update, Woolworths reported positive results despite an ailing economy and a high cost of living.
• The retailer’s online deliveries now account for 5 percent of its sales thanks to the increased use of Woolies Dash.
• Woolworths’ Food business outpaced its Fashion Beauty and Home business in terms of growth for the period.

The battle of online grocery deliveries has heated up in recent years with almost every major retailer now offering fast delivery for groceries and other items.

This morning, Woolworths released a trading update detailing how its business is going. Like all retailers, Woolworths has had to endure the storm brought on by interest rate increases and an ever-increasing cost of living. Still, it appears to be weathering the storm rather well with turnover and concession sales increasing by 4.7 percent or 3.9 percent in constant currency terms.

“In South Africa, our business operations were further disrupted by a number of external factors, including the Western Cape taxi strike, congestion at the ports, and the impact of Avian flu on the availability of key product lines. Sales growth for the current period should also be considered in the context of the high prior-year base in which Group sales grew by
13.4%, driven in part by the post-Covid pent-up demand in Australia,” Woolworths told shareholders.

The big winner for Woolies is its Food business which saw turnover and sales grow 8.4 percent. This was in spite of the impact of Avian flu which reduced the availability of eggs, poultry and other key food categories. In comparison, the Fashion Beauty and Home business only saw turnover and concession sales increase by 1.4 percent.

What is incredibly impressive is the note that online sales increased 46.2 percent during the reporting period and now contribute 5 percent to all South African sales. This is largely thanks to Woolies Dash, the store’s app that delivers groceries to your home on the day they were order.

For the sake of comparison in its results released 2nd July, Shoprite Group reported that sales through Sixty60 account for “less than 5 percent” of the group’s consolidated sale of merchandise. Of course, Woolworths is grouping all online sales, including through Woolies Dash under one banner.

This doesn’t deny that the report from Woolies is incredibly impressive given the thinning wallets of shoppers. It highlights just how popular Woolworths is and suggests that South Africans are willing to pay more for high-quality products they may not find elsewhere.

As further evidence of the growth of the online delivery service, in its Integrated Annual Report 2023, Dash accounted for 66 percent of online food sales.

It also helps that Woolies Dash preserves the cold-chain for orders which is especially important for dairy, meat, fish, and other temperature-sensitive products.

The Woolies Dash service covers 90 percent of the retailer’s customer base, per the aforementioned Integrated Annual Report.

Looking ahead to the Festive season, Woolworths appears to be motivated, despite the economy.

“Notwithstanding the challenging macro context, our teams remain focused on profitably trading our businesses, supported by robust trade plans as we approach the key festive season. We are confident in our strategies, and continue to invest in our existing businesses as well as new growth opportunities, enabled by our strong balance sheet,” the firm wrote.

Over the next three years, Woolworths will be spending R10 billion to improve its margins as reported by Reuters.

This investment will be used, in part, to improve customer experience which should be a concern for other retailers. Woolworths already has a deep understanding of its customer base and pushing more investment into bettering an already incredible customer experience could help the retailer achieve even greater heights.