This is why Woolworths is in trouble

Simone Mitchell
JULY 25, 2016
news.com.au
New research on customer satisfaction in Australian supermarkets doesn’t paint a pretty picture for Woolworths.
First, comes the announcement that 500 jobs will be cut as part of a major overhaul of its business.
The supermarket chain will shut underperforming stores and restructure its operations in a $1 billion plan to boost its bottom line.
Woolworths chief executive Brad Banducci said a further 1000 staff would be moved “directly into our businesses to improve accountability and help us better support our store teams and customers”.
It seems improving customer experience should indeed be a priority, as Canstar Blue has just released the results of a customer satisfaction survey. And it doesn’t paint a pretty picture.
Aldi, Foodland, Coles, IGA and Woolworths were all put under the microscope, with Woolworths receiving the lowest score overall.
”[Our] recent survey of 2925 Australian shoppers found that Woolworths shoppers were less satisfied than customers of either ALDI or Coles on a range of criteria,” said Canstar Blue Group Executive, Megan Doyle.
“This is what our survey respondents told us and presumably it’s what Woolworths’ customers have also been telling them, hence [today’s] restructure”, said Doyle.
Out of five stars Woolworths scored a meagre three in the areas of overall satisfaction, value for money, food freshness, customer service, store layout, deals/specials available and quality of private label products.
In no category did they receive a five-star result (Foodland and Aldi both received five-stars in certain categories).
“It’s a very fine line for supermarkets to tread, I think,” continued Doyle.
“Our survey analysis found that the single biggest driver of satisfaction for supermarket shoppers is value for money. But, customers also value customer service, store layout, freshness of products — so the challenge for supermarkets is to balance cost competitiveness with great overall service.
“Interestingly, 25 per cent of our survey respondents said that they have started using a different supermarket chain over the past 12 months. We didn’t ask which chain they had switched from and to, but I note that the ACCC has stated that ALDI now has a 10 per cent market share, so it’s apparent that ALDI is receiving a net benefit of switching customers.
“So it’s not surprising that ALDI has topped our customer satisfaction survey again this year.”
Canstar Blue commissions respected professional market research companies, Colmar Brunton and Iview to ask Australians about their experiences with purchased products or services.
These shoppers then rate their satisfaction level with their brand of choice, on a sliding scale.
This particular supermarket research was finalised in June 2016 and was published today.