Walking through one of Woolworths' flagship stores, such as the one in Sandton City, can be disorienting. This isn't the Woolies your mother used to shop at. Sure, there are the familiar staples of chinos and shirts, but on top of this there's also a near-cacophony of third-party brands vying for attention.
There are two precedents for this. Firstly, Woolworths' own Country Road, Trenary and Witchery brands occupy prime real estate in the largest clothing store. In fact, one of the first brands you'll see in some stores is Country Road Group Brands.
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Second, the company's food business initially (back in the 1990s, I think) only sold “first party”/private label products. Slowly we introduced third party brands and now you can buy Cadbury chocolate, cola and Kellogg's corn flakes in our supermarkets.
Current CEO Roy Bagattini introduced Birkenstock shoes, Levi's jeans (a natural introduction given his career) and Sunglass Hut glasses shortly after taking on the role. Bagattini took the job in 2020 as the world grappled with the Covid-19 pandemic.
third party brands
The group had argued that its shocking underperformance in the first half of the decade was simply due to too many private labels. At one stage they included Woolworths, W Collection, Studio W, David Jones (which has since been disposed of), Edition and RE:. This is joined by Country Road, Trenary, Witchery and Mimco (since retired).
The problem is, the introduction of third-party brands didn't stop at Levi's and Birkenstocks. Woolies has steadily added brands over time, including starring Dyson in its home department (previously it had elevated the positions of SMEG, Nespresso, NutriBullet and Bosch).
The Sunglass Hut (owned by Essilor Luxottica) seems a bit different from the other counters, and these counters seem to be a clear concession in larger stores. That said, the presence of Levi's, and now He Guess, denim could also be a concession. Major stores have also started introducing the Super Dry brand. This, coupled with numerous third-party brands and Country Road Group brands, makes the shopping experience at these stores reminiscent of visiting a department store from his decade or his three years ago.
For example, some of the Woolies stores in Sandton City don't look all that different from what Edgars, or indeed Stuttafords, tried to offer customers in their heyday.
The strategy mirrors Woolworths' attempt to introduce Puma to 11 stores nearly 15 years ago. This failed miserably and the Puma His brand space within each store was soon repurposed for Woolies' own brand.
But today's market is very different from what it was like when the country hosted the FIFA World Cup.
Problem…
There is a problem. Woolworths is trying to target both the wealthy and the mass market.
The big box stores in Sandton City, the V&A Waterfront and Mall of Africa are going nowhere. The beauty proposition plays a very large role here, which is not surprising given the decline of Edgars in recent years (admittedly, the company maintains the Edgars Beauty proposition, but this (This is a far cry from the market leadership position the company held 10 or 20 years ago.)
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But Woolworths has also been steadily and rapidly rolling out “basic” stores, dubbed W Edit, in centers and markets where it would not normally be able to open a Woolies. These include neighborhood centers that compete directly with Pick n Pay Clothing, as well as local shopping malls where you wouldn't expect to find Woolly.
These W Edit stores are relatively indistinguishable from a regular small Woolies store, although they look similar to and look like Woolies.
There's a conundrum here. Will these very different services resonate with customers who will experience both formats?
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Of course, grocery retailer Checkers has proven that this strategy works well with its own Fresh X strategy. While the company's next generation supermarkets feature Kauai, Starbucks and Krispy Kreme counters and all sorts of other luxuries, there are no standard stock items. Ruffles are also sold at other aging stores. Customers don't seem confused (yet). One is checkers and the other is “nice” checkers.
Can this also be applied to clothing retail?
Stuttaford waiting to happen?
Another question is whether shoppers really want this. The collapse of Stuttaford clearly showed that customers no longer wanted the products of a “classic” department store, and the near death of Edgars perhaps reiterates this.
There are branded outlets selling these products in the heart of the city, where Woolies has grown so much. Shoppers can visit his Levi's, Guess, Superdry, Birkenstock, and (any number of) Sunglass Hut outlets in the same mall.
Can Woolies pull this off? (Based on the fact that all of these brands are still given floor space, there appears to be a positive contribution to overall sales growth and deal density.)
More importantly, can Woolies' W Edit entry-level offer stand out, at least in terms of sales volume? The jury is out now…