Woolworths still bringing in the digital shoppers

Woolworths Group is continuing to record high levels of customer engagement in its digital properties, despite a shift back to in-store shopping.

CEO Brad Banducci described the retailer's first half performance as "a very balanced result”.

“A key feature of the half was the continued reversion of customers' shopping patterns," he said.

That has “impacted ecommerce sales, which were down 9.5 percent across the group" compared to the prior corresponding period.

Group ecommerce sales dropped to nearly $3.2 billion, compared to $3.5 billion from the same time last year.

Despite the ecommerce sales decline, average weekly digital traffic rose by 9.5 percent as customers kept engaging with Woolworths' digital platforms.

Banducci said that while shoppers are returning to in-store purchasing, “one thing that has remained constant is digital engagement” across websites and apps.

Groupwide, its digital properties averaged 22.7 million visits a week, with "approximately 50 percent of digital traffic growth coming from apps, particularly Everyday Rewards”.

“At the end of December, we had 14.1 million Everyday Rewards members and active rewards members have grown by over five percent," Banducci said.

“Membership programs are coming back into vogue globally and are a critical way for us, not only to know more about our customers and personalise what we do for them but to add even more value for our members who are our best customers.”

Warehouse IT

On its major warehouse investments, Banducci said the company is “continuing to work through the inevitable teething challenges of commissioning new technology.”

Woolworths has been working on its supply chain transformation since 2019, developing various distribution centres across Australia, including a $780 million technology and fitout investment in Moorebank.

“We are starting to make good progress and are pleasingly past the halfway mark in a multi-year transformation," Banducci said.

“[There is still] a long way to go. But it's nice to be well progressed and starting to see benefits come into our P&L [profit and loss] at the same time as we continue to make investments”.

Woolworths CFO Stephen Harrison said its “investing activities of $839 million was below the prior year primarily due to proceeds on the partial sell-down of the company's Endeavour Group shareholding”.

He added the proceeds of $634 million “will be used to fund our investment in Petspiration Group, which the company acquired a 55 percent equity interest in last December."

Harrison added the group operating capital expenditure for the half was $928 million with “IT spend increased predominantly due to lifecycle management and the replacement of store equipment, together with increasingly new stores renewals and digital”.

IT spending reached $129 million, with growth capital expenditure in digital hitting $72 million and commerce $69 million

Group sales increased four percent from last year to $33.2 billion, compared to $32 billion from the prior period.