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Wednesday, 01 June 2011 17:59

Woolworths warns of retail paradigm shift


Australian retailers are facing a 'paradigm shift' of such magnitude that it is likely 30 percent of all electrical goods sales will be made online within three to five years according to the head of Woolworths' online initiatives.

Speaking at the Cebit retail conference, Daniel Roberts, Woolworths' head of online, warned that companies which didn't acknowledge the change could suffer rapidly declining revenues and market share. Mr Roberts who has launched online retail sites for Woolworths brands Dan Murphy's, Dick Smith and Big W in the last year would not be drawn on when the grocery chain itself might offer online shopping.

However he said that Woolworths'; 'CEO and executive leadership are 100 per cent behind this'. He also confirmed that; 'Woolworths has spent multi millions developing a multi-channel platform,' leaving the audience in no doubt that online grocery shopping was now a matter of when rather than if for Woolworths.

He acknowledged that: 'The question going on now is which categories to focus on.'

Mr Roberts said; 'You will see more initiatives over the next few months. Dan Murphy's will move to click and collect in the not too distant future.'

He said that demand for online liquor sales had been strong. 'Australia Post ships 3 million cases of wine a year,' he said, adding that in the UK 10 per cent of wine sales were now made online.

'We see a similar proportion in Australia over the medium term,' he said.

What happens to margins online? read on

However Mr Roberts confirmed that the transition to multi-channel retailing could prove challenging to retail orthodoxy.

Previously part of Tesco's online team in the UK, Mr Roberts said that 'At Tesco Direct the margins we expected were twice what we got' because of the different mix of purchases that customers made online. 'It's hard to make multi-channel work,' he said.

Mr Roberts outlined the steps involved to develop a successful strategy. Key among these was the need for top level executive sponsorship and having the right mix of technical and retail skills.

'Bob the IT guy won't cut it,' he warned. Fortunately Woolworths' CIO is called Dan.

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