Woolies trials micro-retailing

It’s a Woolworths store so small it only requires two staff and there is barely enough room to swing a shopping bag.

Justin Nolan, General Manager of Woolworths Metro, at the new store in Sydney. Picture: Britta Campion

It’s a Woolworths store so small it only requires two staff to keep it running and there is barely enough room to swing a shopping bag.

And don’t bother bringing your spare change, either: it doesn’t accept cash.

The concept store, in a former coffee shop in the Sydney inner-city suburb of Strawberry Hills, is Woolworths’ big bet on little stores.

It reflects a retail trend in Australia that is generating innovative ideas about convenience.

Small-format metro stores are in fashion, and while there will always be demand for big-box stores — from a Bunnings warehouse and Dan Murphy’s superstore to Costco stores so big you need a GPS to find your way through — little has suddenly become popular.

Woolworths opened its first MetroGo store last week.

While it could be viewed as an emerging threat to the nation’s $5bn convenience sector, it is also a strategy that leverages the supermarket’s unrivalled food supply chain, especially fresh groceries, to take it as close as possible to the shopper — as they walk to and from work.

“MetroGo is really an evolution of what we are looking at with metro. It is getting the right offer to the right customers in the right place,’’ Woolworths general manager for Metro Justin Nolan told The Weekend Australian.

“We are learning a lot, even in the first week we have had this store open.’’

The MetroGo store is very small. It has 655 grocery items compared to as many as 25,000 in some standard suburban large-format supermarkets. It is only 50sq m compared to the average Woolworths Metro store of 600sq m and about 40 times smaller than a full-line supermarket, which can be several thousand square meters.

But Mr Nolan isn’t trying to get too hung up on the size of the store. It is about the curated and focused offer and how it serves key shopper demographics.

“It is certainly a smaller size for us, but it is really for us less about the size of the offer and more about trying to deliver that convenience, the fresh offer that our customers are looking for.

“We are pushing the boundaries of what healthy, fresh convenience looks like.

“One week into it we would say it is similar to the rest of Metro stores. It’s particularly focused, because of the inner-city location, on breakfast, lunch and snacking, and a smaller dinner offer.”

More than half the space in the MetroGo store is devoted to fresh and chilled products, and given the customer base and their needs this makes perfect sense.

“It is very much dominated by what you can eat on the go and eating now,’’ Mr Nolan explains.

“For the office worker it is really hitting that moment of breakfast, lunch and snacking.

“Our customers have been asking how can I have a really convenient fresh offer that is really close to where I am in my daily commute. This is our next step in really understanding how we can get Woolworths Metro to satisfy that need.’’

What has helped supercharge MetroGo is the use of Woolworths’ latest digital technology, the Scan & Go application, which allows shoppers to pick up items in the store, scan them with their phones to pay and then walk out.

The novel mobile phone payment system exemplifies a catchy phrase in retail at the moment, “frictionless shopping”, whereby shoppers can easily, efficiently and swiftly glide into a store, get their purchases and glide out again with as little drag as possible.

It’s a concept Woolworths supermarkets boss Claire Peters has been talking about for more than a year. Coles executives are also on the case to limit friction at key transaction points through the supermarket.

Mr Nolan said the Scan & Go payment option had been used by 500 customers at the new MetroGo store in the past week, and helped generate about half the sales volume.

It is estimated roughly 5000 shoppers have used Scan & Go at all Woolworths stores offering the technology.

Scan & Go was launched by Woolworths in September 2018 at its first site in Woolworths Double Bay, Sydney, and has since been rolled out to six more stores including MetroGo.

Mr Nolan confirmed the average basket size for a Scan & Go customer was slightly smaller than an average shopper, but not dramatically different.