Add Category“We continue to see our digital operations as complementary to our in-store offer, with many customers enjoying this omnichannel experience,” Wesfarmers CEO Rob Scott said in an investor briefing on Friday.
Indeed, Wesfarmers plans to accelerate its online progress in the next 12 months with the development of a $100 million data and digital ecosystem that will help its retail businesses deliver more seamless and personal experiences.
Tim Riches, group strategy director at branding agency Principals, said this is in keeping with other major retailers that are moving beyond digital basics like click-and-collect.
“Commanding preference over competitors and locking in more share of wallet isn’t going to come from click-and-collect. Most of Australia’s big players are focused on the nexus of personalisation, content, and reward for the next generation of retail,” Riches told Inside Retail.
“This will be at its most potent when it’s really solving human problems, such as the relentlessness of family mealtimes, the challenges of working from home and getting more pleasure from online shopping.”
But e-commerce is still a long way from fully offsetting bricks-and-mortar sales, as can be seen in the sales figures from Wesfarmers’ first seven weeks of trading in FY22, when half of Australia and all of New Zealand returned to lockdown.
Sales were down across the board compared with the prior corresponding period, although on a two-year basis, they were up significantly in all retail businesses except Kmart and Target.
Ian Bailey, managing director of Kmart Group, which includes Kmart, Target, and Catch, put it plainly: “When stores cannot trade, revenue declines, and much of our store costs remain in place, especially as we have made the decision to support store teams through these difficult times.”
Wesfarmers has committed to paying all permanent and many casual team members who are required to isolate or where there is no meaningful work available through the end of December due to the lockdowns. This is expected to require an extra $2-$4 million per week in payroll costs.
“Wesfarmers sees this as an investment that provides much-needed certainty to team members, their families and our businesses in the leadup to Christmas,” Scott said.
Bunnings
Bunnings reported a 12.5 per cent increase in revenue to $16.87 billion, with earnings increasing 19.7 per cent to $2.18 billion. The retailer launched a new online shopping site with an improved look and feel in April, and it plans to extend its online offering to trade customers in the near future.
Kmart Group
Kmart Group’s revenue increased 8.3 per cent to $10.0 billion for the year, and earnings increased 69 per cent to $693 million. Total online sales, including Catch, which sells only online, increased to $1.9 billion for the year.
Bailey said there was a significant opportunity to optimise the group’s online operations, including replatforming the Kmart website to improve the customer experience, and to combine the group’s assets to deliver value. For instance, Catch now sells a wide range of Kmart and Target products.
The conversion of selected Target stores to Kmart is now mostly complete.
Officeworks
Officeworks’ revenue increased 8.7 per cent for the year to $3 billion, and earnings increased 7.6 per cent to $212 million. Online penetration, including click-and-collect, was around 35 per cent in the year.