Food stand-alone store

economic - What's already been done

Our economic pillar includes our contribution to the South African economy, local sourcing, responsible lending and our store expansion programme. Woolworths is a proud South African business with a long tradition of quality and innovation in South Africa.


contribution to the South African economy

Woolworths continues to create wealth across a broad spectrum of the South African economy, at the most fundamental level by generating direct employment and career opportunities for over 18 000 people and indirectly, many more through our manufacturing and processing network.

Woolworths reiterated the company’s commitment to buying as much product locally as possible. The vast majority of goods sold in our stores, by volume, are manufactured in South Africa and we continue to be determined to encourage local manufacturing wherever possible.

International sourcing is only encouraged where the right technology and quality is not available locally, or comes at a premium to the customer.

Woolworths is also uniquely placed to drive enterprise development projects and has set up teams devoted to working more closely with emerging suppliers, further driving this commitment to supporting South African businesses first.

economic - what we're doing

Food inflation has affected our customers and suppliers. Woolworths works hard to ensure the best possible value proposition for customers and constantly reviews ways of curbing inflationary pressures. Woolworths continues to benchmark value against key competitors. Woolworths basic grocery lines are competitively priced, ensuring the best possible quality at everyday great value.

Woolworths’ expansion programme has continued to make good progress in 2008:

  • Woolworths opened 42 stores, bringing the total number of stores to 385 in 2008;
  • trading space in Woolworths retail increased by 4.8% in clothing and general merchandise, and 14.4% in food at the end of June 2008, compared to the prior year; and
  • Woolworths continues to support 157 franchise operations in South Africa, in selected African countries and in the Middle-East.

The economic climate has had a negative effect on the credit environment, resulting in escalating bad debt. Woolworths credit risk management and collections processes, however, remain sound. Woolworths has tightened credit granting criteria to reduce bad debt. There was a strong focus on collections both internally and through external collection agencies. The National Credit Act (NCA) has resulted in slower customer growth in the book as all the conditions of the act are implemented.

Woolworths value added statement

         
  2008   2007  
Value added 21 753.6   18 641.9  
Less: Cost of sales (13 076.7)   (11 399.9)  
   Cost of services and other operating expenses (3 743.8)   (2 908.2)  
  4 933.1   4 333.8  
         
Distribution of wealth:   %   %
     to employees as salaries, wages and other benefits 2 560.6 51.9% 2 129.3 49.1%
     to government as income tax (including deferred tax) 552.5 11.2% 434.7 10.0%
     to lenders as finance costs 502.5 10.2% 378.7 8.7%
     to shareholders 629.8 12.8% 550.4 12.7%
     depreciation and amortisation 374.4 7.6% 316.7 7.3%
     earnings retained 313.3 6.3% 524.0 12.2%
  4 933.1   4 333.8  



  • Roll out 28 new corporate stores (9 full-line and 19 food stand-alone) and 12 new franchise stores, including 10 Woolworths Food Stops. The focus will be on fewer but bigger stores across all store formats;
  • continue to focus on enterprise development initiatives; and
  • consolidate our business with our local South African supplier base – grow our southern African supply base over the next five years to ensure we retain the majority of our clothing sourcing in the region; and maintain strong local and regional food sources. Simultaneously we will investigate new international sources to ensure affordability and value to our customers.

case study

Creating jobs and driving economic development


Gusco machinist, Lugelwa Qutyana, at work

The introduction of reusable bags in 2004 was an opportunity for Woolworths to preserve the environment by reducing the amount of plastic used as well as to support enterprise development. The range of reusable fabric shopping bags is made exclusively for Woolworths by local factories, one of which is the Greater Uitenhage Sewing Co-operative (Gusco) based in Uitenhage, Nelson Mandela Metropole. Formed by the Uitenhage Despatch Development Initiative, Gusco has been producing and supplying reusable bags for Woolworths since September 2005 and is an amalgamation of three groups of informal community sewing groups. The co-operative enterprise now employs 27 full-time machinists and a number of seasonal employees. Gusco currently produces 260 000 reusable bags for Woolworths each year.

Nafeesa Dinie, SMME Business Unit Head at the Uitenhage Despatch Development Initiative, said, “We hope to grow Gusco’s business this year by attracting and securing additional contracts and are looking at opportunities to diversify their product line. Ms Dinie adds, “The ladies of Gusco have come a long way from being unemployed, to being business owners and this has been achieved in a relatively short period with the support of all stakeholders. Woolworths was key to this success, and this clearly signals Woolworths commitment to support and contribute to sustainable community enterprise development in our country.”