Woolies might become a print media mogul?
While supermarket giant Woolworths last week announced a big increase in sales and profits from its food and liquor divisions, the big news this week is that Woolies has won recognition as a key media player.
Woolworths’ free monthly magazine ‘Fresh’ was the fourth most-read magazine in Australia in the 12 months to June 2013 and the most-read in its category, Food and Entertainment, according to market research organisation Roy Morgan Research.
The supermarket group had earlier announced a “sustainable” final Net Profit After Tax of $2,259.4 million for the 2013 financial year (FY13), up 24.4 per cent on the previous year.
Fresh magazine readers spend more and more likely to try new foods
According to Roy Morgan Research, data indicated that Woolworths’ ‘Fresh’ magazine was reaching a “lucrative target audience with big discretionary spending power”.
Primarily female and their household’s main grocery buyer, Roy Morgan Research said the typical ‘Fresh’ reader was 64 per cent more likely than the average Australian to spend more than $200 per week on groceries and 20 per cent more likely to try new food types. ‘Fresh’ readers were usually between 25 and 49 years old.
Nearly 8 out of 10 (78.2 per cent) of ‘Fresh’ readers said they love to cook, well above the national average of 62.4 per cent.
Besides being prolific grocery spenders, ‘Fresh’ readers were often the first among their friends to try new brands available in the supermarket (51 per cent more likely than the average Australian) and to buy new kitchen gadgets or small electrical appliances (60 per cent more likely), according to Roy Morgan Research.
Readers of ‘Fresh’ magazines were also influencing other consumers, with friends and family asking their advice on everything from buying new food products to health and nutrition, according to Roy Morgan Research.
“Being a free magazine, ‘Fresh’ might attract foodies looking for savings, but it’s also attracting true and influential foodies,” said George Pesutto, Media and Communication, Roy Morgan Research. “It seems that content and positioning have hit the mark,” he said.
“’Fresh’ readers are very interested in food and cooking, and are willing to spend big on buying the latest food products and kitchenware,” Mr Pesutto said. “With readers like these, and as the most-read magazine in its category, ‘Fresh’ offers a golden opportunity to food marketers looking to ‘preach to the converted’,” he said.
Other popular magazines in the Food and Entertainment category included Super Food Ideas, Australian Good Taste, Recipes +, Delicious, Donna Hay, Australian Gourmet Traveller and Feast.
Food and liquor gains momentum, prices drop
Meanwhile, Woolworths’ net profit after tax from its continuing operations, before significant items, increased 8 per cent on the previous year, or 6.1 per cent on a normalized 52-week basis.
The Company said the result showed “increasing momentum” in Food and Liquor, with higher comparable sales and EBIT growth, strong volume growth, increased market share and strong trading area growth.
“This result demonstrates increased momentum across the Group that shows Woolworths will continue to generate sustainable profit growth into the future,” said Grant O’Brien, Woolworths Managing Director and Chief Executive Officer.
“Customers are benefiting from lower prices and suppliers are benefiting from higher volumes,” Mr O’Brien said. “Combined with our strong cost discipline, we are also able to reward our shareholders through higher returns,” he said.
Woolworths said its ‘More Savings Every Day’ campaign and ‘Extra Special’ offers for Everyday Rewards customers had reinforced its positions as “Australia’s lowest priced full range supermarket”. According to Woolworths, average prices in its Australian Food and Liquor business were 2.9 per cent lower than the previous year.
Strategic priorites working, says Woolworths
Innovations such as “direct from farmer” initiatives, new bakeries, and Meat Standards Australia (MSA) lines of beef and lamb lead to solid market share growth in FY13, according to Woolworths.
Woolworths said consolidation of its convenience liquor offer under the BWS banner resulted in a “refreshed and re-focussed offer”. Continued expansion of Dan Murphey’s and direct and online channels also contributed to the solid FY13 profit results.
“This strong result has been delivered against a backdrop of challenging retail conditions and high levels of consumer uncertainty,” Mr O’Brien said. “Notwithstanding these conditions, we have seen good momentum across the Group with higher comparable sales and stronger profit growth. In 2013, we served an average of 28.4 million customers per week, an increase of 3.6 per cent on the previous year,” he said.
“We know more about our customers than ever before and as we enhance our offer to meet their needs, delivering a better shopping experience and more relevant ranges, more customers are shopping with us,” Mr O’Brien said.
“We continue to work on our Strategic Priorities to maximise the value delivered to shareholders through our existing portfolio whilst also looking to the future with new growth businesses,” Mr O’Brien said. “This is the path to a sustainable future for Woolworths. While there is more to do to realise our ambition of double digit profit growth in the future, the evidence shows we are heading in the right direction,” he said.
Australian Food News reported in July 2013 that Woolworths’ sales had been boosted by its rebranded liquor stores, growth in fresh foods and the opening of new stores.