Woolworths Drives Good Business Journey

One of south Africa’s most historic and favourite retailers, Woolworths is deepening its connection with consumers by placing sustainability at the heart of everything it does. Julie Maggs, GM Beauty, tells Enterprise Africa more about the challenges and opportunities with a sustainability strategy driving the business forward.

South Africa’s Woolworths is perhaps the most recognised, and one of the most loved, brands in the country. In fact, in August 2023, the Kantar BrandZ Most Valuable South African Brands report listed Woolworths as the eighth most valuable brand in the country, highlighting the company’s focus on sustainability as a key driver of success. “Sustainability has become a fundamental requirement for doing business and it is also an enormous opportunity for brands,” the report said.

In October 2022, the company was the first SA retailer to remove single use plastic bags from all of its food markets. Part of a zero-packaging waste to landfill strategy, which includes adopting recycled and recyclable packaging, Woolworths has since removed single use plastic straws, utensils, cotton bud stems and more from its product range.

“We are deeply committed to our zero-packaging waste to landfill vision and delighted to have reached this target,” said Chief Technology and Sustainability Officer, Latiefa Behardien.

In August 2023, used coffee bean sacks that are converted into mannequins for use in the fashion space were adopted by Woolworths, taking another step towards reducing plastic waste to landfill to zero.

“We are delighted to be the first large retailer in South Africa to make such a significant investment in them and going forward we will continue to add more into our stores,” said Tracey Lotter, Woolworths Head of Visual Merchandising.

In May 2023, another fresh initiative was hitting the roads as, in partnership with DSV and Everlectric, Woolworths became the first SA retailer to rollout electric panel vans for delivery services, reducing carbon footprint and cementing its position as a sustainability leader.

“Last year we announced our commitment to electric delivery vehicles, and we are delighted to now have nearly half our fleet powered by the sun.  The new electric vehicles have been introduced on selected routes in Cape Town and Gauteng with further rollouts and extensions into KwaZulu Natal planned to follow as soon as possible,” said Head of Online and Mobile, Liz Hillock.

But in the often hard-to-green beauty sector, where Woolworths remains an industry leader, success has been limited. In September 2022, the company was celebrating the launch of innovative new lipstick products, packaged using paper and bamboo. Recyclable and certified by the Forest Steward Council® (FSC®), these new products form part of the Wbeauty range and come in a range of colours to suit different consumers.

However, the beauty sector remains challenged from a sustainability perspective. Plastic packaging is an obvious blight. Water usage during manufacture is significant. Chemicals and animal testing linger as welfare issues. And locally crafted products are often more expensive than imported, mass-produced goods.

GBJ

Thankfully, Woolworths has taken a commitment to a ‘Good Business Journey’ through which it aims to be more sustainable, more transparent, and more inspirational to others. In the beauty industry, where sustainability leadership is required to encourage good practice, the company has onboarded industry veteran Julie Maggs to lead the way forward.

She is ambitious and committed to the group’s strategy.

“I have worked in the beauty retail industry for close to 30 years,” she details, adding that her career spans multiple departments at EDCON before joining Woolworths in 2022. “Woolies is synonymous with sustainability and giving back – the Beauty department is no different.

“We’re heading into an exciting time with ambitious goals ultimately designed to double Woolies Beauty over the next five years,” she continues. “We are committed to supporting local industry, not just through buying product, but ensuring that we educate and grow small businesses with our expertise and investment.”

When the company began phasing out plastic bags in the food division, it partnered with a local company to develop a durable, reusable bag. This helped that business to treble its staff count and become a sustainable business in its own right.

For Wbeauty, the Woolworths house brand, local businesses have been engaged on everything from packaging to formulation and marketing. All products are vegan, cruelty-free, and paraben free. The range includes skincare, foundation, eye products, lipsticks, and associated makeup essentials.

“Wbeauty proudly manufactures close to 90% of their products locally,” smiles Maggs. “We have a number of partners, including SDK Agencies who are 100% black owned and woman-led and specialise in colour, fragrance, and skincare. Across our various suppliers we’ve created 500 jobs – a benefit to the local economy.”

Having launched a number of brands and new concepts in the past (MAC, Bobbi Brown, Kiehls), Maggs has a clear understanding of what customers want and how they want to engage. And the environment is mixed. All want sustainability, all want quality and affordability, but different products must be consumed in various ways. Woolworths recently launched AMAZI in key stores around the country; an offering where consumers can attend beauty bars and enjoy nail services. AMAZI is proven to have had a real impact through upliftment, education, and empowerment. “We’re exceptionally proud to partner with them,” says Maggs.

“From a sustainability perspective, we take immense pride in how we formulate our home brands,” she adds, saying that new brands are imminent but must adhere to the company’s strict standards. “We only use responsibly, ethically, and sustainably sourced vegan ingredients, our packaging is recyclable or reusable, and we don’t test on animals. We have big ambitions in our Beauty business. We’re looking to introduce new brands (both local and international) and incorporate beauty departments into more stores and double the value of the Woolworths Beauty business over the next five years. This focus and determination is already evident in our Canal Walk store which is home to our newest WBeauty flagship.”

REFLECTED IN RESULTS

Woolworths Good Business Journey involves a number of key deliverables as part of the company’s Vision 2025. Having a fully transparent, traceable, and ethical supply chain by 2025; all private label products will be reusable, repairable, resealable, or recyclable by 2025; all key commodities will be from traceable sources by 2025; and all private label clothing, beauty, and home products will contain at least one renewed, reused, or recycled production material input by 2030. Add this to net zero carbon impact by 2040 and 100% of energy to come from renewable sources by 2030 and the focus on positive change looks strong for Woolworths.

At the same time, the business itself must be sustainable and profitable to ensure the good work is viable in the long-term. In August, the company released financial results for the year ending 25 June 2023. Turnover was up 7% to R85.7 billion, profit before tax was up 29.5% to R6.7 billion, and Group CEO Roy Bagattini, was thrilled. “It has been a transformational year for our Group,” he said. “I am very pleased with the progress our teams have made in executing against our strategies, delivering a strong set of results and the highest earnings per share in the history of our Group.”

In the post-Covid environment, where shopping trends and retail life have changed dramatically, Maggs reports that beauty has remained strong throughout.

“It’s a category known to be generally resilient, and we’re enjoying a resurgence both in stores and online,” she says. “We’re particularly pleased about maintaining growth in our Online division in a post-Covid world because the initial sentiment suggested people were shopping online instead of visiting stores. We’re learning that our customers do both.”

Away from Woolworths stores, as many employers have slowly called for a return to the traditional workplace, the beauty industry is also realising positivity and, thanks to its convenience, Woolworths has been best positioned to meet demand.

“The return to office trend has increased opportunities for our makeup and fragrance business; categories that were sluggish during lockdown, while we’ve maintained the demand for skincare which was a lockdown win for us,” says Maggs.

But post-Covid, while successful in some areas, has been a real challenge in others as the economic impact and changes in consumer behaviour have been difficult to keep up with. Whether its macro challenges around energy supply or individual spending power, Woolworths has had to remain nimble.

“Our key challenges include supply chain issues relating to availability of packaging, cosmetic ingredients, loadshedding and the cost of living,” admits Maggs.

“These challenges have led us to collaborate with suppliers further in advance and be agile in our approach (to packaging, for example) when needed.

“Loadshedding has been a significant burden this year,” she adds, noting more than 4000 hours of blackouts in 2023 by mid-July. “The cost of diesel to run generators (all Woolies stores stay open during loadshedding) has had a marked effect on our bottom line. This extends to our local suppliers too – many of them have been forced to spend capital on solar or generators which influences their cashflows.

“Our customers are under enormous financial pressure, and this has driven us to continue creating and delivering high-quality products at a price many would consider affordable,” she says, against the backdrop of a weak Rand, high interest rates, escalating debt, and inflationary stress.

OFFERING OPPORTUNITY

To deliver the necessary excellence expected by the public, especially when times are tough and repeat business from loyal customers is essential. This is how Woolworths satisfies shareholders and continues to grow in a highly competitive retail industry. This excellence comes from people. Part of the company’s Good Business Journey is to promote inclusive growth for all, and Maggs says this a real strength within Woolworths.

“An achievement I’m particularly proud of is having worked from the bottom up and being fortunate enough to offer others the same opportunity,” she explains. “At Woolies we value people; our training and graduate programmes make it possible for employees to learn on the job, regardless of their backgrounds.”

Building these skills allows for better planning, stronger development, and deeper understanding of markets, and this keeps Woolworths at the cutting edge allowing it to compete on metrics beyond just price.

“In terms of trends and forecasting, there are dedicated teams designed to track and forecast new opportunities, and we rely on them to inform our innovation in the space. These insights harness our ability to stay on the pulse and, when partnered with customer data, determine which trends are most likely to resonate with our shoppers and perform well,” explains Maggs.

Through all of the innovation and positive influence that Woolworths contributes, it is now recognised as a globally as a responsible retailer. This was solidified in September when the company celebrated its 15-year partnership with WWF South Africa through which the pair have spearheaded advancements in sustainable farming and seafood sourcing, water stewardship, alien plant clearing, on-pack recycling labelling, and various other initiatives.

With beauty, fashion, and food all taking big strides forward in sustainable performance this year, Woolworths continues to lead the way, setting an example for other retailers, while consistently reinforcing its brand position in the minds of all South African consumers.