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A range of Woolworths chicken products.
- Woolworths will “adjust” the prices of some of its most popular food products, particularly chicken, in the coming months.
- In total, the company plans to “invest” 1 billion rand to keep prices lower for the next two to three years.
- Woolworths wants its prices to be more affordable for households struggling with the pandemic.
- For more articles, go to www.businessinsider.co.za.
Woolworths has committed to “more affordable prices” and plans to “invest” 1 billion rand to keep prices lower for the next two to three years.
This means, in effect, that you can lower your profit margins on some products and raise prices less than you previously planned. Savings due to cost reduction and business efficiency will also be channeled to lower prices.
Last year, Woolworths food prices increased 6.5% on average. This is almost double the average price increases (+ 3.4%) in both Pick n Pay and Shoprite during the last six months. However, this did not affect their sales: Woolworths food sales increased by almost 11% to R35.8 billion in the year to June.
Still, the company is concerned about the impact of the coronavirus pandemic on South African households.
“As we know our customers are under pressure, we are investing even more in our pricing to ensure that we remain relevant and affordable, without compromising our quality,” says Zyda Rylands, CEO of Woolworths SA.
Woolworths says it will start by extending savings of R250 million in food prices, particularly chicken, over the next few months.
Prices will be adjusted for the full range of fresh chicken, including whole and portioned chicken packages, but excluding their “Easy to Cook” range, shredded and marinated chicken.
“While this investment will initially be more visible in our poultry products, we have also implemented more promotions on the basics of daily life in grocery, home care and personal care to make them more affordable for more customers,” says Rylands.
READ | You could be paying 36% more for bananas at Woolworths if you don’t buy organic
Rylands says the company has focused on reducing costs and identifying efficiencies in its business and value chain. “We are pleased to be able to pass most of the savings from these efficiencies to our customers.”
In addition to food price cuts, it will also “invest” R250m in key apparel staples in its fashion business. This division saw its profit before tax fall by 46% to R948 million last year.
READ | Woolworths now sells Birkenstocks, and will add more brands as it fixes fashion ‘mistakes’
While the strict lockdown regulations, which initially prohibited the sale of many FBH products, contributed, the company noted that even before the lockdown, the division suffered “disappointing” performance. Profit margins were slashed when he tried to ditch the stock with sales and other promotions.
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