Woolworths Limited

This article is about the Australian retail company. For retailers of a similar name, see Woolworth.
Woolworths Limited
Public
Traded as ASX: WOW
Industry Retailing
Founded 1924 (1924)
Founder Percy Christmas
Stanley Chatterton
Cecil Scott Waine
George Creed
Ernest Williams
Headquarters Bella Vista, New South Wales, Australia
Area served
 Australia, New Zealand, India
Key people
 Gordon Cairns, Chairman
Brad Banducci, CEO
Revenue Decrease A$60.68 billion (2015)[1]
Profit Steady A$2.45 billion (2015)[1]
Number of employees
 202,000 (2011)
Divisions Supermarkets (Woolworths, Countdown (supermarket), Thomas Dux, Food For Less, Flemings)
Petrol (Caltex Woolworths)
Liquor (BWS, Dan Murphy's)
General Merchandise (Big W)
Home Improvement (Masters)
Hotels & Gambling (ALH Group)[2]
Website Woolworths
Woolworth Online
Woolworths Limited headquarters in the Norwest Business Park

Woolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. It is the second largest company in Australia by revenue, after Perth-based retail-focused conglomerate Wesfarmers,[3] and the second largest in New Zealand.[4] In addition, Woolworths Limited is the largest takeaway liquor retailer in Australia,[5] the largest hotel and gaming poker machine operator in Australia,[5] and was the 19th largest retailer in the world in 2008.[6]

Despite similar names, Woolworths Limited has no affiliation with the F.W. Woolworth Company in the United States, the now-defunct Woolworths Group in the UK or the South African chain of retail stores, Woolworths Holdings Limited. Its main operations include supermarkets (under the Woolworths brand in Australia and the Countdown brand in New Zealand), liquor retailing (as BWS and Dan Murphy'sin Australia), hotels and pubs under the Australian Leisure and Hospitality Group (ALH Group) umbrella, and discount department stores under the Big W name in Australia.

History

Woolworths flagship store in the Sydney CBD
For a company listing, see List of Woolworths Limited companies.

Woolworths opened its first store, the Woolworths Stupendous Bargain Basement, in the old Imperial Arcade Pitt Street, Sydney, where Westfield Sydney now stands, on 5 December 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 five founders – Percy Christmas, Stanley Chatterton, Cecil Scott Waine, George Creed and Ernest Williams. One of the foundation investors was Preston Lanchester Gowing, the then chairman of Gowings.[7] The name on the draft prospectus drawn up by Cecil Scott Waine was "Wallworths Bazaar" – a play on the F.W. Woolworth name (the owner of the Woolworth's chain in the United States and United Kingdom). 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, Woolworths Ltd in Australia has no connection with the F.W. Woolworth Company in the United States, nor the Woolworths Group of UK.

The new Woolworths store was innovative; it was the first variety store in the world to use cash registers that print receipts for customers.

Christmas 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 Lion Nathan in 1979, then 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, and Progressive Enterprises and 23 of Foodland's Action supermarkets came under Woolworths' ownership. This acquisition brought total store numbers in Australia to near 750.

During the late 1920s, the company grew, with a second store in Sydney and stores in Brisbane and Perth. It grew further in the 1930s, despite the depression, until by the end of 1933 it had 23 stores. In 1933 the first store in Melbourne was opened. On 1 April 1936 the company bought eight stores from Edments Ltd and opened its first store in Adelaide. The original Imperial Arcade store was moved to larger premises in Her Majesty's Arcade, a short distance along Pitt Street near the Market Street corner.

World War II slowed the growth of Woolworths and the Australian and United States military used Woolworths' warehouses in Sydney for storage. After the war expansion was rapid and in 1955 Woolworths opened its 200th store, in the Civic Centre in Canberra (since closed). At this point Woolworths was still mainly a variety chain and had not moved into the food sector that uses the "Woolworths" brand 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 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 expanded the consumer electronics arm of its business with the purchase of the Tandy chain in Australia from InterTan Inc in 2001. The company sold the Rockmans chain in 2000, and the Dick Smith Electronics chain in 2012.

In 1985, the acquisition of the 126 Safeway stores in eastern Australia made Woolworths the largest food retailer in Australia. Safeway stores were 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 acquired a 19.99% interest in Woolworths Limited. Woolworths and Safeway supermarkets in Victoria traded under the Safeway brand, and Safeway's Food Barns in Queensland and New South Wales became part of Woolworths.

Around this time, the supermarket chain had run eight small supermarket chains including the Queensland-based Food For Less and the Sydney-based Flemings, both of which survive.

In 1989, the company was acquired by Industrial Equity Limited and was 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 four cent a litre discounts, Woolworths entered into an agreement with Caltex to co-brand some Caltex outlets as Caltex Woolworths. These joint venture outlets are supplied with fuel by Caltex and with groceries by Woolworths, and accept Woolworths cards and discount dockets.

In 1999, Woolworths began a joint venture with the Commonwealth Bank called Woolworths Ezy Banking, but was scaled back by 2006. In 2005, the company reached an agreement with the ANZ Banking Group to install ATMs at Woolworths locations. Additionally, by 2008, it had invested in financial services infrastructure and expertise, building a team of 50 staff for this purpose.[8]

In 1997, Woolworths opened its first Metro convenience 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. Subsequent stores opened in Coogee, Boronia Park and West Pennant Hills in Sydney and Ascot in Brisbane. Stores that have since been sold or re-branded are Newtown, Waterloo and its Sydney city store (all in Sydney).

Woolworths started to expand into liquor businesses with the acquisition of Dan Murphy's in 1998. By 2001, the BWS chain had been established. With Queensland licensing laws dictating that retail outlets must be operated by a hotelier, Woolworths moved into the hotel industry in 2005 in a joint venture with experienced hotel operator Bruce Mathieson, purchasing hotelier Australian Leisure and Hospitality Group (ALH). Later in 2005 the ALH Group expanded its portfolio to 250 hotels by acquiring the Taverner Hotel Group and the Bruce Mathieson Group. The ALH Group is 25% owned by Bruce Mathieson and 75% owned by Woolworths. Statistics provided during the acquisition of the Taverner group showed that over one third of sales are made up of gaming/poker machine takings.[9] The number of poker machines owned by Woolworths and Bruce Mathieson after ALH acquisitions was 10,722.[10]

In 2006, the company had three major events:

In 2006, Woolworths rolled out new Retalix point of sale systems running on IBM POS hardware with LCD touchscreens throughout all its stores.[11] These self-serve checkouts were initially trialled in Carlingford, NSW.

In August 2007, Woolworths announced that it was planning to launch a general purpose credit card in 2008.[12] It is expected to offer credit cardholders reward vouchers redeemable through its store network.[8] HSBC was subsequently named as its credit card partner.[13] Woolworths subsequently announced that the Woolworths Everyday Money MasterCard would be launched on 26 August 2008 and allows customers to earn shopping cards redeemable at Woolworths group retailers.[14][15] It was suggested Woolworths could earn approximately $20m from credit cards in three years and that it was targeting 100,000 to 150,000 cardholders in the first year.[16]

Into 2008, a Wake Up Woolworths campaign, largely funded by the Construction, Forestry, Mining and Energy Union, was pushing Woolworths to sever its relationship with Asia Pulp & Paper over claims of deforestation of Indonesian rainforests. Asia Pulp & Paper supplies Woolworths' Select Brand tissue products.[17]

During 2009, Woolworths Ltd. and Lowes purchased Danks Ltd.[18] owners of the Home Timber and Hardware brand. The joint venture with Lowes, one of North America's largest home improvement chains, announced Masters. The first of these stores, Masters, was opened to the public in Braybrook, Melbourne, Victoria, on 1 September 2011.[19] Aiming to open 150 stores within the next five years, as of June 2014 there were 49 stores operational with more being constructed and/or planned. The business has not been profitable, in 2015 Masters lost A$227.4 million.[20] On 18 January 2016 Woolworths announced that it intended to "either sell or wind up" Masters hardware and Home Timber and Hardware.[21] Chairman Gordon Cairns said that it would take years to become profitable and that the ongoing losses could not be sustained.[22]

The Australian Leisure & Hospitality Group, 75% owned by Woolworths,[2] operates over 12,650 poker machines across Australia, making it the largest operator of pokies in Australia.[23] The poker machines are estimated to raise $1.2 billion in net revenue each year.[23] Michael Luscombe in 2010 told shareholders he has no intention of leaving the poker machines business,[24][25] and the company has lobbied against mandatory pre-commitment technology.[26][27][28] When mandatory pre-commitment was implemented, the Woolworths owned hotels created a loyalty card scheme to offer incentives to frequent gamblers, giving them free food and drink.[2]

See also

References

  1. 1 2 Sales report. "Full Year Results - Financial Year 2015, Page 21" (PDF). Retrieved 16 November 2015.
  2. 1 2 3 "Woolworths under fire from anti-poker machine groups for introducing gambling rewards card in pubs". ABC News.
  3. ↑ "Coles puts Wesfarmers on top". The Sydney Morning Herald. Retrieved 2016-04-28.
  4. ↑ NZPA (26 October 2007). "Commission: Red Shed takeover would create a 'pure duopoly'". Business story (New Zealand Herald). Retrieved 23 November 2006. Commerce Commission lawyer Stephen Kos told the court the market essentially consisted of a single acknowledged price leader and other price followers. "The effect of the merger would be a creation of a pure duopoly." ... Now Woolworths and Foodstuffs had roughly equal market shares, Kos said.
  5. 1 2 Moore, Ali (5 March 2006). "Man of the Moment (Interview with Woolworths' boss Roger Corbett)". Business Sunday (Ninemsn). Retrieved 23 November 2007. This is a very personal question but it is probably going to be the last chance we get to speak to with you on Business Sunday. You are now the biggest pokies operator, the biggest pub owner, the biggest liquor retailer in Australia.
  6. ↑ 14 January 2008 12:00AM (14 January 2008). "Woolies makes top 25 global retailer list". News.com.au. Retrieved 11 July 2010.
  7. ↑ "GOW372_Annual(pg1-14)" (PDF). Retrieved 11 July 2010.
  8. 1 2 "Retailers take on the banks…again". Australian Financial Review. 30 January 2008: 1, 61.
  9. ↑ Woolworths Limited taverners analyst presentation Archived 4 January 2007 at the Wayback Machine.
  10. ↑ "Retail Giants Place Side Bet on Pokies", theage.com.au, 28 March 2006.
  11. ↑ "Australia's Woolworths Meets Store Service Strategy with Retalix StoreLine". Internet Retailer. Retrieved 14 October 2007.
  12. ↑ "Now it's Woolworths the credit card people". Sydney Morning Herald. 27 August 2007. Retrieved 6 September 2007.
  13. ↑ "Woolies way ahead at checkout". Melbourne Herald Sun. 27 February 2008. Archived from the original on 29 February 2008. Retrieved 27 February 2008.
  14. ↑ "Woolworths launches new credit card". news.com.au. 18 August 2008. Retrieved 18 August 2008.
  15. ↑ "Woolies MasterCard debut". Financial Informer. 16 August 2008. Retrieved 1 January 2015.
  16. ↑ "Woolies makes move into credit cards". Australian Financial Review. 19 August 2008: 13.
  17. ↑ "Woolies under fire over pulp products". The Age, Melbourne. 5 June 2008. Retrieved 14 July 2008.
  18. ↑ Greenblat, Eli (2009-08-25). "Woolworths moves into hardware with Danks buy". SMH. Retrieved 2015-11-15.
  19. ↑ http://miy.masters.com.au/about/media/first-masters-store-opens-today-in-braybrook-melbourne
  20. ↑ Knight, Elizabeth Knight (11 September 2015). "Masters is a home improvement haemorrhage". The Sydney Morning Herald (Faifax Media). Retrieved 17 January 2016.
  21. ↑ "Woolworths intends to exit Home Improvement business". www.woolworthslimited.com.au (Press release). Woolworths Limited. 18 January 2016. Retrieved 18 January 2016. Woolworths Limited (Woolworths) today announced that it intends to commence an orderly process to exit its home improvement businesses, Masters Home Improvement and Home Timber & Hardware, ...
  22. ↑ "Woolies winds up Masters". Courier Mail (News Corp.). 17 January 2016. Retrieved 17 January 2016.
  23. 1 2 "Woolworths' pokies 'target low-earners'". The Sydney Morning Herald.
  24. ↑ http://www.couriermail.com.au/business/wooworths-accused-of-causing-social-harm-with-its-substantial-ownership-of-poker-machines/story-e6freqmx-1225956419910
  25. ↑ "The Wilkie pokies walk clause — it’s compulsory pre-commitment - Crikey". crikey.com.au.
  26. ↑ http://www.theaustralian.com.au/national-affairs/woolworths-lobbies-opposition-for-voluntary-pre-commitment-on-poker-machines/story-fn59niix-1226261972512
  27. ↑ "Woolworths gambling giant ALH attacks pokies bet-limit system". The Sydney Morning Herald.
  28. ↑ http://www.heraldsun.com.au/business/woolworths-joins-fight-against-federal-governments-pokie-reforms/story-fn7j19iv-1226204704735

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