Big W Is ‘Worthless’ And Amazon Is a Major Threat Claim Woolworths
Big W is “worthless” and Amazon is a threat to the extent that Woolworths now has a task force working on how to take on the US online retailing giant.
The Woolworths Amazon task force is looking at how to compete across all aspects of the Woolworths empire.
At yesterday’s Annual General Meeting Company executives warned it would get nothing for Big W if it sold the chain tomorrow. Chairman Gordon Cairns said Australia’s discount supermarket sector was “significantly challenged” in Australia after several questions from the floor, following the shock exit of its chief, Sally Macdonald, last week.
Mr Cairns was quick to assure investors this was not another Masters Home Improvement, least of all because of the scale of the chain.
“Big W made about $200 million two or three years ago, the truth of the matter is we’ve let it deteriorate and if we were to try and sell it now, we’d probably get nothing for it,” he said.
Mr Cairns warned the turnaround would take time but said Woolworths had proved with its supermarkets operation that it could improve its performance.
Discussing the re-election of former US retail executive Kathryn Tesija to the Woolworths board, chairman Gordon Cairns revealed that the company had set up a separate task force to respond to the threat by Amazon.
Mr Cairns said Ms Tesija had been providing “coaching and insights’’ to that team.
Ms Tesija told the meeting that Amazon was a competitor in the online space but could not replicate the network of well-located stores that Woolworths had built up over 91 years in cities across Australia.
“They are a formidable competitor,’’ Ms Tesija said. “They are somebody we should take seriously.” Amazon is reported to have delayed its launch in Australia from May to September to expand its offering from general retail to fresh food in a move that would pose a threat to established retailers.
The company plans to open distributions centres in capital cities around Australia next year that would enable it to deliver goods to customers and “fulfilment centres’’ where shoppers could collect goods.
Woolworths intends to compete up against Amazon by offering Food as well as consumer electronics and appliance goods as well as clothing and liquor.
Kathryn Tesija said a lot of things Woolworths was doing “today” were focused on customer loyalty to help it “compete and prepare for the future”.
“They (Amazon) are a formidable competitor, there are lots … but they would be new,” Ms Tesija said.
Mr Cairns pleaded with shareholders for time to turn the company around, and reaffirmed plans to fix the Big W department stores before considering a sale.
Woolworths was forced to take heavy losses on closing its Masters hardware joint venture, sell the Home hardware business and search for a new chief executive for Big W after the resignation of high-profile former Oroton chief executive Sally Macdonald.
The resignation, after 10 months and following a 2.1 per cent fall in sales, reignited speculation that Woolworths would look to sell the business. But Mr Cairns said it would be better if the company tried to turn around its performance: “The truth of the matter is that we have let it deteriorate and if we tried to sell it we would probably get nothing for it.’’