Christine St Anne: Woolworths Chief Executive Grant O'Brien spoke at a recent Australia-Israel Chamber of Commerce Sydney Lunch. O'Brien spoke out about how the retail giant was using innovation in food retailing.
Grant O'Brien: In food retailing weï¿½re, if you like, addressing two parts; one is the new and the other is the, I guess, the existing and more accepted part of our business, which is the bricks and mortar. We've got customers, as I said, that are dividing and conquering, and what we happen to do as a result, is innovate. We're innovating by providing in the online space greater access, greater choice, greater ranges, all those sort of things. But the challenge for a bricks and mortar retailer like us is that we continue to ensure that our bricks and mortar remains relevant.
St Anne: He also spoke about getting the balance right between bricks and mortar and online retailing.
O'Brien: We have got a concerted effort on increasing the reasons for people to visit a bricks and mortar store. Yes, we'll do online and we're well underway with that, but I think retailers can come unstuck if they run to online and forget about the relevance of their bricks and mortar store.
Female Speaker: Given that you've got so much invested in them, so you're saying in fact the online could cannibalize your stores, if you're not careful?
O'Brien: They work together, and what you've got to do, is you've got to make sure that you're providing extra reason for people to visit the bricks and mortar.
St Anne: Those extra reasons include a new approach that involves shopping as a theatre and some very innovative technology.
O'Brien: If I look to the innovations that we are driving at the moment, we are putting back into our stores a whole lot of innovation and theatre, if you like. We're rolling out at the moment sushi counters, where we've got sushi chefs in all of our stores, so that there is freshness, there is theater, there is tasting.
We are working also to integrate that with what we're doing in the technology space. So, we're working on an application at the moment that when you drive into the car park, it will recognize you in the car park and start to, based on your previous shopping experience, load your shopping list and show you through the store.
St Anne: Big retailers like Woolworths have come under criticism for squeezing manufacturers, but O'Brien says retailing has now come under the sole control of the consumer.
O'Brien: When I started and I was cutting my teeth in the merchandise area of our business, it was unquestionable that the manufacturers had the power. They had the products, they controlled the shelves, they controlled the supply chain. If you picture in your mind the Arnott's truck, the Arnott's truck, the red truck would pull up outside of the supermarket, it controlled the shelf, it decided how much product came in and it controlled and had the data, which it would come and present back to the retailer and say here is what you need to do and the retailer would say, good thank you. Power was with the manufacturer.
That changed I would say 5, 10 years ago, where retailers started to control the supply chain. They built their own warehouses. Product went through the warehouses. We had access to data, so we were in a very different place to where we had been, and it was a different relationship with manufacturers.
We're both in second and third place now to a very important person, who is number one and unquestionably number one at the moment, and that's the customer, because the customer actually has access to all those sort of things now. They control the supply chain. They can control whether or not they come into a store or they get it delivered to their home. They can control the data. They have got transparency across the globe in terms of what prices they should be paying for goods, so it's moved from manufacturer to retailer to consumer.
St Anne: Nevertheless, there were partnerships to be had between food retailers and manufacturers, which could be developed with the focus of the consumer in mind.
O'Brien: So, last week I spoke at a forum for the AFGC, the Australian Food and Grocery Council. That's the body that - one of the overarching bodies for the manufacturers. And I went and spoke as a retailer and one of things I proposed to them, I have since done that in writing formally to the Chairman of the AFGC, is that we should form a body moving forward with both retailers and manufacturers are together, because I think that's one of the messages from me today. I think that's a way forward for us is to focus on the consumer, not each other so much and we'll both win as a result.
St Anne: Christine St Anne for Morningstar.