Getting out of liquor and pokies will cost Woolworths, but deliver lasting benefits
Woolworths has announced it will separate from its liquor and gaming businesses. While it may cost Woolies in the short term, Jason Pallant explains why it is the right move for the supermarket giant’s reputation and brand image, in this crossposting from The Conversation.
The Woolworths Group proclaims it celebrates “family-friendly values”. Within its supermarkets the company has sought to demonstrate this commitment. Woolies gives out free fruit to kids, for example, and no longer gives out plastic bags.
Being a company committed to ‘family-friendly values’ and corporate social responsibility does not sit well with profits from drinking and gambling.
Dallas Kilponen/AAP
Its goal, the group states, is to “inspire our customers to consume all of our products in a healthy, sustainable way”. It’s a noble goal – but one undercut by its profits from pubs and pokies.
It’s a no-brainer and well overdue.
This is more than PR gimmickry, it’s about allowing Woolies to focus in their core business, which is selling groceries. The ‘family values’ spin is just that, spin.
By ditching non-core businesses, such as hotels, Woolies become less of a behemoth and should be more nimble. They have the beast of Omni channel to crack, without worrying about a bunch of pubs. Unfortunately, losing the liquor division is collateral damage to this and time will tell if jettisoning Dan Murphys was a good idea.
The family values piece is nonsense. How many people have changed shopping habits for this reason? A very small minority at best, despite the pokies situation being well known for years. Australians love a deal and will shop with the best value alternative, pokies or not.
Good move by Woolies, but not for the reasons you’ve bought into.
So Woolworths separates on paper only. No one is getting rid of the pokies, they are just taking them off the paper work and creating new special paperwork for them.
Pigs
So all they’re doing is consolidating their booze and gambling companies into a seperate entity, but retaining ownership?
Doesn’t really look like they’re doing anything to minimise harm, rather deflect negative attention from their core business.
it’s just a shuffling of the paperwork it an attempt to make them look good and it will most probably work – they still retain ownership.
KGB,
I definitely agree that focusing on the core business is a big/ main reason for the move. Woolies said as much in their ASX announcement. My point here was that it also presents an opportunity for a side benefit of more clearly distinguishing the values/ propositions of each part of the business.
Cheers,
Jason
Good decision but a bandaid attempt to appease the public. I for one don’t buy any none grocery items from the supermarkets. I use my consumer power to support small local businesses that slave away… ie I walk next door to the newsagent to buy a magazine or newspaper. As I also do for vegetables and meats. I drive past the Woolworths or Coles service station and find the independent provider (usually cheaper and without those grubby discount vouchers). I assume most in this industry don’t do this as they seem to all just be grubby hanger-on’s who want free samples and … of course free booze at tedious launches etc 😉
Most Australians, industry or not, shop at the major supermarkets because it’s convenient, cheap and they stock the products they are looking for. I’m not sure what this has to do with being a hanger-on, free samples or product launches.
IF Woolies are so holy they should get out of sugar drinks , chips chocolates and lollies.
It’s all a joke and not in Shareholders interests.
Just makes Directors with no skin in the game feel good to the long term detriment of returns.
I wonder how many who advise others how to run their business have ever run a business themselves ….
Amazing news….. but wait!
Does Woolworths benefit from the spin of ultimately.. or are we saying here that its a one off spoin of, the bag the doughand then a new conglomerate takes over from them.
Real integrity ? .. bagging the profit and earmarking it for Wellness programmes.
As corporations are now default Goverments.. az no frills flight to Welington and a chat with Jacinda Ardenn who just delivered the world’s first Mukti Bilion dollar welness budget can explain.
No doubt nice for Woolies to mlook like that are divesting.. but to what level.
Great artricle,
Henry Roth
A fair point, Jason, thanks for the reply and thought provoking article.
Unless they are then selling the company they are still the pokie liquor people arent they.?
They are consolidating the pubs and alcohol into a new group called Endeavour, they will then demerge it and either float it or sell it.
It has been reported that they are looking to retain a ~18% minority stake in Endeavour
https://www.afr.com/business/retail/fmcg/motivated-woolworths-hands-value-to-mathieson-family-20190703-p523vn