Woolies blames plastic bag ban and Coles' Little Shop promo for slump in sales
Plastic bags and Coles’ miniature toys are being blamed for a slump in Woolworths sales.
The supermarket giant reported a sales hit for the first quarter of the 2019 financial year, with its full-year results tracking at 1.3 per cent, down from 3.1 per cent in the last quarter of 2018.
Woolworths group chief executive Brad Banducci told news.com.au part of the slump was due to customers adjusting to the phasing out of single-use plastic bags.
He said the company expect sales to improve over the course of the half the year.
“Our customer satisfaction metrics are broadly back to levels prior to the removal of single-use plastic bags, including Time in Queue,” he said.
Woolworths officially banned single-use plastic bags from stores in June, a move that proved contentious with customers.
Mr Banducci admitted the supermarket had been caught off guard by the backlash to the plastic bag ban and would have done things differently “a second time around”, but “wouldn’t have changed our decision”.
“The impact and the time for customers to get used (to the ban) has been greater than any of us had thought,” he said. “It has been a more painful adjustment than we thought. We know from our experience in pilot stores (it takes) eight to 10 weeks for people to adjust, so we’re still in the early stage.”
Competitor Coles’ Little Shop miniature toy promotion was also blamed for the sales drop.
Speaking to analysts, Mr Banducci said the Coles Little Shop had reduced the overall number of visits to Woolies, “particularly with grandparents buying plastic toys for their kids”.
He said Coles Little Shop was a “successful program and it’s having traction”.
“Were the numbers greater than we expected? Probably a little bit,” he said.
Mr Banducci said the focus was on fixing the basics and being ‘consistently good’ at the fundamentals.
Woolworths increased its full-year net profit by 12.5 per cent to $1.72 billion, with total sales up 3.4 per cent to $56.7 billion.