Woolworths Holdings looms as new rival for Woolies, Coles

Eli Greenblat
FEBRUARY 12, 2016
THE AUSTRALIAN
Woolworths Holdings CEO Ian Moir says there’s a “gap in the market”.
Ian Moir, the boss of South African retail giant Woolworths Holdings, has for the first time given a glimpse into his strategy to turn department store David Jones into a leading Australian food retailer by placing a target on the backs of supermarket duo Woolworths and Coles.
Mr Moir said overnight that David Jones had begun to build up relationships with local suppliers and invested in its own infrastructure capabilities, with the group primed to grab a slice of the nation’s $90 billion grocery sector by offering fresh quality produce and prepared meals that was currently missing from the supermarket landscape.
In a direct threat to market leaders Woolworths and Coles, Mr Moir told South African analysts last night the David Jones food offer would grow over time to be a “big business’’ in Australia that was “revolutionary”.
The push into groceries would be led by David Jones’ new boss, John Dixon, a former senior executive at iconic British retail chain Marks and Spencer, who is credited with engineering and leading the turnaround of its food operations. It would leverage of the strength of the 178-year old David Jones brand.
Mr Moir added that research into the Australian grocery market commissioned by Woolworths Holdings as it prepares its assault showed it to be one of the best earnings opportunities up for grabs for David Jones.
“Food is high on our agenda, it is high on John’s agenda, and we have just completed a piece of research which was exciting for us, and the head of the research company said it’s the clearest opportunity that he has researched for a very long time,’’ Mr Moir said.
David Jones would exploit weaknesses in Woolworths and Coles’ current offers.
“There is a gap in the market, it’s not being provided by Woolworths or Coles and we can fill that gap,’’ Mr Moir said.
“The (David Jones) brand can carry that so the extension into foods is a natural one for David Jones.
“It needs to be revolutionary, it needs to be a significant improvement in the offer, so freshness needs to be better, there needs to be a greater prepared offer, it needs to look like and feel like Woolworths (South Africa) but an Australian Woolworths (South Africa) with Australian product and Australian focus.
“If we can get that right this can be a big business, it’s going to take time, it’s going to take capital investment and it will not reach its potential in my lifetime as CEO, and maybe not even John’s because this could be a big bus that we really need to build and build well over time.”
Under its former owners, David Jones attempted to push into the food space, eventually losing more than $120 million on its Foodchain stores that were eventually closed in 2003.
Up-market food stores have had a poor run in Australia, with Australian Woolworths’ $20 million chain Thomas Dux dying a slow death, as it closes down stores and shrinks its business after failing to generate a winning strategy.