E-Commerce Summit: No going back on digital revolution, says Woolworths Brad Banducci

Woolworths CEO Brad Banducci says there is no going back on digital revolution, saying digital will double in-store visits in a few short years.

Woolworths chief executive Brad Banducci has declared there will be absolutely “no going back” to the old ways of retailing before the COVID-19 pandemic hit at the start of the year.

The virus had accelerated the nation’s take-up of digital engagement and online shopping by at least three years in just a few months, Mr Banducci told The Australian’s E-Commerce Summit on Wednesday.

He said Woolworths was on track to have almost twice as many digital interactions with customers as physical store inter­actions within 18 months.

And it wasn’t just US e-commerce giants such as Amazon that Woolworths was competing with, he said. For example, Uber­Eats had the biggest growth in online deliveries for the past quarter, beating Amazon.

Mr Banducci said the investments Woolworths had made in the years before the health crisis put it in a good position to withstand the huge online volumes triggered from March as the pandemic emerged.

He said a budget target of 40 to 45 per cent growth in its food business through the COVID-19 crisis had actually been eclipsed by growth of 80 to 100 per cent.

But despite the wins, Woolworths, as well as everyone else in the retail sector, needed to continue to invest in e-commerce, Mr Banducci said.

“It was a very strong trend before this, and if I critique numbers in fiscal 2019 when the (Woolworths) board asked me why are we growing so quickly and why couldn’t we grow more quickly — my answer was there is plenty of demand from consumers (but) what we are not doing is meeting it with enough supply.

“So I think actually as an industry we have been supply-­constrained for at least the last two years,” he added.

“E-commerce was increasing demand, and in this case ourselves and many of our competitors all responded with an increasing supply and that is what has really led to acceleration.”

He agreed with many that the COVID-19 crisis had accelerated the penetration and use of e-commerce in Australia, especially over the past few months.

“Three months equals three years — I think it is a nice saying, and I believe it. I don’t think there is any going back.’’

Mr Banducci said digital ­engagement with customers on everything from providing opening hours to helping them curate online shopping lists was the key to the future, with the retailer expecting a boom in its digital platforms over the next few years.

“Digital is the key. We have got somewhere in the order of 12 million digital visitations a week at the moment in Woolworths supermarkets, and somewhere around 19 million physical transactions, and I fully expect within the next 18 months we will have one to two times as many digital interactions as physical ones.

“So they (digital platforms) are critically important; they really help the customer on the journey, and that’s of course especially true and has been especially true in a time of COVID where customers really want to plan, even if they shop a physical store, a very safe, seamless and quick experience.’’

Mr Banducci said there still ­remained a “critical role” for the physical stores in supporting the retailer’s digital transformation and online shopping, with about 85 per cent of groceries ordered online picked and packed from Woolworths bricks and mortar ­supermarkets.

This meant Woolworths would continue to “sweat the physical assets” to maintain efficiencies and keep costs down as it pivoted to e-commerce solutions.

“It means we have to sweat our physical infrastructure; we need to continue and creatively redesign our stores and redesign the way we pick products for our customers in the stores, how we rout our personal shoppers around the store to make sure it is a fully in-stock pick and that we actually pick the right products for the customers and the right level of freshness.

“So the No 1 thing for us philosophically is sweating our physical infrastructure, and we are very privileged to have a very large and very strong store network and a very highly motivated team in store. And the question becomes how we overlay additional investments over that.’’

Mr Banducci said the unveiling this month of trial mini-fulfilment stores at a Woolworths supermarket in Melbourne was the first in a test of retrofitting automated assembly lines to pick, pack and send online orders from the back of operating physical stores that could prove a winner in the digital battle.

“We only launched it last week but what I am most proud about actually is not that we did it but we did it remotely and our team literally did it in Melbourne,” he said.

“None of us has been there from the support office … and it says something really interesting in terms of the empowerment for our team’s agility, and so I think that is real achievement.”