Woolworths, a leading retail group in South Africa, has recently released its trading update for the 20 weeks ending on November 12, 2023.
The report highlights a significant increase in online sales, particularly in the food category, driven by the growing popularity of Woolies Dash, the company’s on-demand food delivery service.
According to the update, Woolworths experienced a 4.7% increase in overall revenue, with online food sales skyrocketing by 46.2%.
This surge in online sales contributed 5% to the total sales in South Africa. The company attributes this growth to the increased penetration of Woolies Dash, which offers convenient and efficient grocery delivery.
Despite the impressive performance of its online channel, Woolworths emphasized that in-store food sales remained the primary driver of its overall food sales growth. This achievement is particularly noteworthy given the challenging economic environment in South Africa.
Woolworths acknowledged the weak economic conditions in the country, which have been further exacerbated by the ongoing energy crisis. The company stated, “The economic environment in South Africa remains weak, exacerbated by the country’s energy crisis, which continues to have a pronounced impact on both business and consumer confidence.”
In addition to its food business, Woolworths also provided an update on its Fashion, Beauty, and Home segment. Although the trading space for this segment decreased by 0.2% compared to the previous period, online sales experienced a notable growth of 23%, contributing 5.2% to the total South African sales.
The trading update also highlighted several external factors that impacted Woolworths’ performance, including Western Cape taxi strikes, congestion at ports, and the Avian Flu’s impact on the availability of key products. Despite these challenges, Woolworths reported a 4.7% increase in turnover and concession sales from continuing operations.
It’s important to note that these figures exclude the contribution of the David Jones business, which Woolworths disposed of in the previous period. On a total basis, including the contribution of David Jones, turnover and concession sales decreased by 22.4% compared to the previous period.
Woolworths’ online on-demand grocery delivery service, Woolies Dash, competes with other prominent players in the market, such as Checkers Sixty60, Pick n Pay asap!, and Zulzi. While Checkers Sixty60 currently dominates the sector, services like Woolies Dash aim to close the gap.
However, with Woolworths only offering the Woolies Dash service from 78 branches, it still has some ground to cover in terms of market reach.
Nevertheless, Woolworths reported an impressive 150% increase in Dash sales over the past financial year, indicating the growing demand for convenient online grocery delivery services.