WoolWorths holdings limited 2013 good BUsiness JoUrneY report

the broader whl group
Africa
GDP growth in sub-Saharan Africa has been over 5%
per annum over the past three years. The International
Monetary Fund (IMF) predicts that half of the world's 20
fastest-growing economies during the next five years will
be found in sub-Saharan Africa, with average growth for
the region of over 6% per annum.
Recent economic growth has led to rising household incomes
and is driving the emergence of Africa’s middle class.
Retail trade in Africa is beginning to formalise and Woolworths is
actively evaluating all opportunities across our targeted countries
and is well placed to take advantage of this growth opportunity.
Our total footprint in Africa consists of 60 stores in 12 African
countries outside South Africa. The product mix in our African
stores features about 90% clothing and the rest food. Food
distribution remains limited to those countries that surround
South Africa and which are therefore in reach of our cold chain.
During the past year, we have opened seven new stores and
converted eight stores from franchises. We have commenced
negitiations for converting the 33 franchise stores in Botswana
and Namibia. We plan to open three new stores in the new
financial year.
We continue to take a long term view on the WHL group’s
expansion into Africa. As markets formalise and infrastructure
develops, we follow with products and services that fit the
market and its price points. To be able to execute this, we have
to improve our supply chain cost and efficiency, and ensure
that we are not paying double duty on products exported
from South Africa. Our ambition is to reach critical mass in the
countries in which we already operate so that we can leverage
our investments in supply chain – with the focus predominantly on
clothing and general merchandise.
We want to implement sustainable end to end processes
into these markets to ensure that we improve our customer
value proposition.
Medium term target: R1 billion by 2014.
To achieve this we plan to:
– Grow our retail footprint by opening stores in the larger,
more formal and affluent areas. We also want to partner
with property developers and retailers to be able to achieve
economies of scale.
– Build a reliable and cost effective supply chain by focussing
on creating a cost effective logistics capability with consistent
service delivery. This will require the implementation of a
systems solution for end-to-end exports.
– Improve our customer value proposition by using cost savings
in the supply chain to reposition our price position.
– Build the Woolworths brand in our African markets by
introducing loyalty programmes, giving customers access to
exclusive promotions. Zambia and Nigeria have launched.
– Right product, right time – a result of optimised stock and space
management, as well as the introduction of a trade plan which
is aligned to the South African business.
– Establish a sustainable employment value proposition that
meets our requirements for compliance, affordability and our
ability to reward performance.
As Woolworths grows its business in Africa, we recognise that
for our business to be sustainable we need to incorporate
socio-economic transformation not only in our own operations
or by contributing to it within South Africa, but also in a broader
African context.
Kenya
We opened our eighth store in Kenya, in Thika Road, Nairobi,
further cementing our joint venture with Deacons. This adds to
the six existing stores in Nairobi and one in Mombasa.
We have partnered with Deacons for the last fifteen years to
take our trademark clothing to Kenyan shoppers. The relationship
evolved from franchise to a joint venture on 1 April 2013, further
marking Woolworths confidence in the partnership with Deacons
and growth of the Kenyan economy.
On a business trip to the Kenyan operations, Ian Moir,
Woolworths CEO commented: “The opening of the store is
the next step in expanding our presence in the country with
our joint venture partner, Deacons. The partnership we have
with Deacons is one that works for both parties, as well as the
local Kenyan environment. Deacons brings its experience and
knowledge of local trading conditions and we bring the quality,
value, innovation and fashion Woolworths customers know
and appreciate.”
“We continue to look for opportunities to invest in Kenya as well
as the rest of Africa. We are confident in our Kenyan investment
and encouraged by the growth prospects in the region.
2013 GOOD BUSINESS JOURNEY / WHL 93