Woolworths Group (Australia)
Woolworths Group Limited, a major Australian company, has extensive retail interests throughout Australia and New Zealand. It is the second-largest company in Australia by revenue, after Perth-based retail-focused conglomerate Wesfarmers, and the second-largest in New Zealand. In addition, Woolworths Group is the largest takeaway liquor-retailer in Australia, the largest hotel and gaming poker-machine operator in Australia, and was the 19th-largest retailer in the world in 2008.
Despite similar names, Woolworths Group has no affiliation with the F.W. Woolworth Company based 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, liquor retailing, hotels and pubs under the Australian Leisure and Hospitality Group umbrella, and discount department-stores under the Big W name in Australia.
On 25 August 2016, the company announced a loss of $1.235 billion for the 2016 financial year, the biggest loss in the more than 20 years since it has been publicly listed on the ASX, mainly due to more than $2 billion in write-downs of the failed Masters business and losses in the Big W business.
History
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 £185,000, and although 85,000 shares were offered to the public, only 81,707 shares were subscribed for by 619 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. The name on the draft prospectus drawn up by Cecil Scott Waine was "Wallworths Bazaar" – a play on the name of F.W. Woolworth, the owner of the Woolworth's chain in the United States and United Kingdom. Moreover, 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. It also has no connection to the Woolworths Group in South Africa.The new Woolworths store 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 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. 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 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.
1980s
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, Woolworths was acquired by Industrial Equity Limited, which was in turn one-third owned by The Adelaide Steamship Company, David Jones Limited and Tooth & Co. It was a wholly owned subsidiary until 1993, when it was floated in the biggest share sale in Australia's history.
1990s
In 1996, Woolworths entered the petrol market, initially with wholly owned "Plus Petrol" outlets located in shopping centre parking lots. In 2003, 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, Big W and Caltex Woolworths locations. Additionally, by 2008, it had invested in financial services infrastructure and expertise, building a team of 50 staff for this purpose.
In 1997, Woolworths opened its first Metro convenience store, in Sydney, converting their premier multi-level 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. Known for its rainbow branding with the slogan "Fine food without the fuss", subsequent stores were opened in Coogee, Boronia Park, West Pennant Hills, Newtown, Waterloo and its flagship Town Hall store in Sydney and Ascot in Brisbane. Currently the "Woolworths Metro" brand is used for smaller format convenience stores in the major cities and towns across Australia. Woolworths expanded into liquor businesses with the acquisition of Dan Murphy's in 1998.
2000s
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. 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. The number of poker machines owned by Woolworths and Bruce Mathieson after ALH acquisitions was 10,722.In June 2006, the company opened a buying office in Hong Kong to cut out the intermediary in sourcing foreign-produced items. In September 2006, Woolworths announced that it had taken a 10% strategic stake in The Warehouse Group in New Zealand. Also in 2006, it announced a venture with the Tata Group in India to introduce Dick Smiths Electronics stores to that country.
In 2006, Woolworths rolled out new Retalix point of sale systems running on IBM POS hardware with LCD touchscreens throughout all its stores. 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. It is expected to offer credit cardholders reward vouchers redeemable through its store network. HSBC was subsequently named as its credit card partner. 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. 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.
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.
During 2009, Woolworths Ltd. and Lowes purchased Danks Ltd. owners of the Home Timber and Hardware brand. They entered joint venture with Lowes, one of North America's largest home improvement chains, to launch a new hardware brand named Masters Home Improvement. The first of these stores was opened to the public in Braybrook, Melbourne, Victoria, on 1 September 2011. 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 was not profitable, and in 2015 Masters lost. On 18 January 2016 Woolworths announced that it intended to "either sell or wind up" Masters hardware and Home Timber and Hardware. Chairman Gordon Cairns said that it would take years to become profitable and that the ongoing losses could not be sustained. On 24 August 2016 it was announced that all Masters stores would close on or before 11 December 2016. It was also announced that Woolworths would sell the Home Timber and Hardware brand to Metcash.
Other ventures
The Australian Leisure & Hospitality Group, 75% owned by Woolworths, operates over 12,650 poker machines across Australia, making it the largest operator of pokies in Australia. The poker machines are estimated to raise $1.2 billion in net revenue each year. Michael Luscombe in 2010 told shareholders he has no intention of leaving the poker machines business, and the company has lobbied against mandatory precommitment technology. 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.In July 2019, Woolworths announced plans to sell its gambling and liquor interests. It said ALH and Endeavour Drinks would potentially be spun-off into a separate company and launched on the stockmarket in 2020, but Woolworths shareholders would first need to approve the plan at an annual general meeting.