“It’s striking how consistent the growth rate is across the network,” Woolworths Group CEO Brad Banducci said on Wednesday’s sales call.
“And of course, Big W didn’t benefit from what happened to Victoria in lockdown in terms of converse sectors with our venues. But there’s really good, strong, consistent resonance across the state, both urban and regional. So that’s been a highlight… something more systemic is happening in the business.”
The Big W turnaround
This systemic change at Big W has been led by David Walker, the outgoing managing director who was last week promoted to the newly created role of chief risk officer at Woolworths Group.
Walker said the pandemic played a big part in driving growth across categories related to family and home.
“Toys and leisure, and, frankly, anything to do with kids, kids apparel, books, and anything to do with home, all those soft furnishings, kitchen, small appliances, are in reasonably consistent growth,” he said.
Walker noted that it will come down to whether consumers’ current focus on kids, family and home will change, although he added: “I think it’ll take some time. And I don’t think it will diminish quickly.”
Like many other areas of the Woolworths business, Big W experienced strong e-commerce sales in the quarter, growing by 175 per cent, with record e-commerce penetration of 9.3 per cent of sales. The Melbourne stores that were closed to the public acted as fulfilment centres to meet the increased demand for home delivery and pick up.
The e-commerce offer is expected to go from strength to strength with the launch of Big WX during the quarter, an extension of the Group’s digital arm Woolies X.
Shift in consumer attitudes
The rise in sales at Big W can be attributed to a shift in consumers’ attitude towards the retailer.
Big W’s Voice of the Customer Net Promoter Score (VOC NPS) increased four points on the prior year to 63 and store-controllable VOC improved by one point to 80 per cent.
Banducci said the highlight for Big W is the higher number of shoppers, returned and new.
“The first stage of our turnaround in Big W was to do a better job of holding on to existing customers, who we found were leaving us … we managed to stem that. And of course, once you’ve done that, then the question becomes how you get more people back in to fuel the hard work you’ve done to improve your business,” he said.
People who were not core Big W shoppers had a negative NPS view of the business, Banducci explained. The pandemic helped drive new shoppers to the store and opinions started to change.
“One benefit that happened to us in Covid is that a number of people who hadn’t shopped with us came back. And what they found was something they liked, and they started to shop with us again. That’s why we see transactions grow. So if we continue to provide a good experience, we’re hoping that a lot of these non-core shoppers will become core shoppers again, and that will give us sustainability in what we’re doing.”
Hopeful about Christmas
After a year of stress, tight lockdowns and economic uncertainty, consumers will be looking forward to some festive relief over the Christmas period.
Jana Bowden, associate professor at Macquarie University’s business school believes Big W’s latest campaign will go a long way to winning over shoppers in search of hope and joy this Christmas.
“Consumer confidence is recovering and consumers are buoyed by the festive season sales kick-off. Christmas gives consumers something to look forward to, to focus energy on and it also offers a tangible, justified target for spending,” Bowden told Inside Retail.
“Big W is capitalising on this with its new seasonal campaign with a message of hope, joy, celebration, togetherness and anticipation. It’s about a release of pent-up suppression of consumer emotions. Consumers want relief from the negativity.”
The retailer’s low-cost value proposition will also be an important draw card for consumers, particularly when it comes to purchasing gifts for family and friends. Bowden expects parents to cut back on spending on themselves, and put the extra cash towards spoiling the kids so that their Christmas is as normal as possible.
“Toys are always a popular item in the lead up to Christmas. Families prioritise kids. During the lockdown toy sales spiked as families bunkered down at home and looked for ways to entertain them. Lego, Barbies, puzzles and games have flown off the shelves in 2020,” Bowden said.
“But with Christmas fast approaching coupled with a rollercoaster of a year for families with home school, school shutdowns and social distancing, parents are also likely to feel guilty and buy up for the kids. All parents want their kids to feel happy, secure and safe. From a psychological perspective, gift-giving represents a social opportunity to strengthen relationships and demonstrate care, love, and bonding. Gift-giving is not just about the receiver, it is as much about the giver’s personal needs and emotions.”
With additional resources poured into online, and a partnership with Pinterest using Trend Badges to launch collections on the platform ahead of the season, Big W’s e-commerce sales are expected to remain strong in the run up to Christmas.
“It’s getting ahead of the consumer’s spend curve to reach them during the pre-purchase inspiration phase, target them with tailored content and get on their radar. Following consumer trends like these is critical, since today’s results reveal that $3010 million 10.6 per cent of consumers are now shopping online,” Bowden said.
The long-term future of Big W now rests in the hands of Pejman Okhovat, COO at The Warehouse Group in New Zealand, who will take up the managing director role in the final quarter of FY21. In the meantime, the discount retailer is in the hands of Big W GM of commercial, Teresa Rendo.