Stung by bag backlash, Woolies chief Brad Banducci won’t launch own-brand assault

WOOLWORTHS won’t be ­following Coles in trying to ­massively expand its house-brand range, with chief executive Brad Banducci saying shoppers want choice.

WOOLWORTHS won’t be ­following Coles in trying to ­massively expand its house-brand range, with chief executive Brad Banducci saying shoppers want choice.

The head of the nation’s ­biggest supermarket chain has also hit back at the suggestion the move to start charging ­customers for thicker bags made from recycled plastic is a naked profit grab.

“It is not a profitable thing to do — trust me,” Mr Banducci told Business Daily yesterday.

“Anyone who thinks otherwise should come on over and we will give them a master class in finance.”

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Woolworths is in the spotlight.

Mr Banducci was speaking after Woolworths revealed the move to ban single-use plastic bags had prompted a dramatic slump in sales growth.

The retailer, which also owns Dan Murphy’s and Big W, ­yesterday posted a 12.5 per cent rise in net profit to $1.72 billion for the year to June 24.

It declared a 10c special dividend to be paid in addition to its final dividend of 50c.

At an investor strategy day in June, Coles management said it wanted 40 per cent of all products sold in to be its own labels within five years — up from the “high 20s” now.

The target comes as it battles a resurgent Woolworths and faces ongoing competition from ­German chain Aldi and US retailer Costco, as well as new threats from another German grocer, Kaufland, and US online goliath Amazon.

But it has put brands on edge and sparked a warning from the Australian Food and Grocery Council about customer choice.

Mr Banducci said Woolworths was not interested in setting targets for its private-label range. “We don’t have penetration goals — our goal is to give customers choice and let them choose,” he said.

“There is demand for great products at a great price. Sometimes they will be our products and sometimes they won’t be.”

Woolworths chief Brad Banducci. Picture: Renee Nowytarger.

Mr Banducci said cost was not the only lever Woolworths was pulling on its house brands where it is doing a lot of work to appeal to health-conscious consumers.

“We are working to ensure our own brands are much healthier, there are no artificial colourings or flavourings, we have five-star ratings on them, that they are made in Australia,” he said. “You have got to have a hook outside of price — you need to do more than that to succeed with customers.”

Woolworths shifted 1500 products onto its everyday low price model during the past year.

It now has more than 4800 products at an everyday low price point, or almost 20 per cent of all products in a typical Woolworth supermarket.

Mr Banducci said the focus would now be on tailoring the range to ensure it contained the most popular products rather than expanding it.

“We are less about having more on it than having more meaningful products on it,” he said. “We are less caught up in the number now and more caught up in the right range.”

Supermarket sales grew 4.3 per cent to $37.4 billion for the year to June 24, while earnings before interest and tax rose 9.6 per cent to $1.76 billion — the first growth in three years.

But sales growth slumped to 1.3 per cent in the seven weeks starting June 25 as shoppers ­rebelled against the move to phase out single-use plastic bags and Coles launched its popular Little Shop promotion.

“It was and has been a more painful adjustment than we thought,” Mr Banducci said of the bag change.

Shares in Woolworths fell 0.7 per cent yesterday to $29.41.

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