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Wesfarmers To Double Down On Online Channels

In his address to the Macquarie 2020 Conference, Wesfarmers CEO Rob Scott revealed that the group plans to make even great investments in the online retail platforms for Bunnings, Kmart and Catch, given that these online marketplaces are already pushing capacity limits at distribution centres.

Wesfarmers’ surge in online sales has been driven by the COVID-19 lockdown, as well as expertise gained from the group’s acquisition of Catch. Wesfarmers formally acquired the online retailer Catch Group for $230 million last June.

“We have seen very strong growth in sales in the Catch marketplace and we have also learned a lot about the digital experience within the Catch business that we have been able to roll out in some of our other businesses,” Scott said, according to The Australian.

Scott also revealed that the group plans on maintaining the momentum Bunnings’ online channels have gained in recent weeks.

‘Drive & Collect’ services have been introduced at Bunnings and Officeworks to cope with the increased demand for online shopping. These two chains have witnessed particularly strong sales growth since the onset of COVID-19, driven by surging consumer demand for home office equipment, technology, education supplies and equipment for DIY projects.

In addition, three Kmart stores have been converted to ‘dark’ stores that are focused solely on meeting online orders.

While Kmart has witnessed strong growth in online sales, in-store sales have moderated due to a decline in customer footfall. A similar trend has been witnessed at Target.

As the group boosts investment in online operations, Scott says that customer needs will dictate where exactly this is distributed. “In terms of online investment we will very much be led by the divisions, and by the customer I guess, in how much we spend and how quickly we spend. We are seeing some great opportunities to invest in the digital space,” Scott said.

Scott also noted that as technology continues to develop and improve, the cost of software and cloud-based solutions associated with online retailing is continuing to drop, saying “you can get quite a lot of bang for your buck in terms of the investment you make”.

Following the Macquarie Conference Briefing Presentation, Wesfarmers’ share price on the ASX was up 1.26% at $36.86 this morning.

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