Saturday, May 18, 2024

Woolworths, where is the promised price slash?

Following too much criticism from their local customers over the years concerning their pricing policies, South African retailer, Woolworths announced early this month that it will slash its retail prices ‘from’ mid June 2014.

Well so far, the general observation is that nothing has changed. Prices of both food and clothes still cost almost the same at the 22 stores across the country. But as one may guess, it’s even de-motivating to ask the owners of Woolworths why the much anticipated price slash has not been implemented as yet. This is so because the response of Woolworth’s executives could easily be, “we said the change would be ‘from’. “ We hope however that the retailer will not abuse meaning of the word ‘from’ and apply it in general terms. Perhaps before going any further it is worth noting that this commentary is necessitated by the need to sensitize consumers about their rights. Not just Woolworths customers but consumers in general whose rights have been over ridden by businesses across the retail sector.

Consumer awareness is very important in present days mainly because consumers continue to be exploited by different ways due to different reasons. We were all delighted when at the beginning of this month Woolworths announced that it has put in place plans to offer competitive prices to local consumers by reviewing its retail prices of food and clothing. This was after Woolworths was given the go-ahead to purchase back all of its franchised stores across the country by the Competition Authority (CA) sometime early this year. The move to buy back the 22 stores spread across the country marked the end of its franchise business in Botswana as well as other African countries such as Namibia where the group has similar operations.

The announcement of price reduction followed the taking over of the management of Woolworths stores from previous franchisees in Botswana after which it undertook a comprehensive review of its operational efficiencies as well as pricing models. It is common knowledge amongst both frequent customers and none customers of Woolworths that before this takeover of the Botswana stores, price markups at all the 22 branches throughout country were scary. Well they remain relatively high, at least compared to the South Africans ones, with a markup which goes up to close to 50 percent if not more. The situation was even worse when the local currency was performing well in the market. It has been quiet evident that throughout, as the South African Rand weakened and the Pula strengthened, local consumers were finding the gap in the cost of goods between South Africa and Botswana in Woolworths growing….but not in their favour.

But as Paula Disberry, Group Director of Retail Operations at Woolworths said recently, by improving supply chain efficiencies and changing its business model from franchise to corporate stores, Woolworths have secured savings which it should pass on to its local customers. Woolworths should up its game and know that following the promise it made early this month we are watching them.

The Bottomline though is that the South African retailer must make sure that the price slashing really happens and that it happens to the right degree within the stipulated time frame. To pass the message as it is, Woolworths must bear in mind that its customers and prospective customers have no interest in tiny reductions but rather demand prices that are comparable to those in South African stores. Customers in Botswana also demand the same promotions that Woolworths run in South Africa as part of the promise made early this month by the retailer group.

At the same time, when approving the takeover earlier this year, the Competition Authority claimed that the Woolworths Group had further committed to doubling its sourcing from Botswana suppliers over the next two years, based on the value of its own current sourcing from Botswana suppliers, as well as, the current sourcing of Pinks Family Botswana. To that end, one is tempted to remind Woolworths also of this vital commitment given the non availability of markets for most local products. Let it be a give and take between Woolworths, local producers and most importantly consumers.

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