STAKEHOLDER ENGAGEMENT

understanding the interests and expectations of our stakeholders plays an important role in deepening and extending our relationships.

Stakeholder engagement is integral to the way we do business – especially in the area of sustainable development.

Understanding customer needs is essential to providing the right product at the right time in the specific store where customers expect to find what they are looking for. Woolworths has over 3.8 million customers, and the insights from our customers enrich our segmentation model and drive new opportunities. During the year customers have given us insight into their perception of our value offering and promotions, assisting our segmentation strategy.

Woolworths is committed to meeting customers’ needs at every level and we monitor customer satisfaction throughout the business using various mechanisms including focus groups, social media and our customer service channels.

Improved customer understanding has led to better profiling and cataloguing of stores, with an increasingly segmented offer. Work is also being done to drive a sub-brand review to make each brand simpler, clearer and better segmented within our customer base.

The multichannel strategy has delivered a new Woolworths online site, which is being refined, but will create an improved shopping experience for customers.

During the year we introduced the WRewards loyalty programme, which is assisting us to:
  • Build more profitable long-term relationships with more of our customers; and
  • Reward and retain our loyal customers.


The programme has exceeded our expectations across the board, having added 450 000 new cardholders and ensuring we are now tracking 61% of our total revenue on Woolworths cards compared to 49% last year.

We have grown our customer engagement around sustainability issues, with in-store awareness campaigns, increased use of our social media platforms and a new relationship on TV with 50/50. The result has been a significant increase in customer awareness and support around the Good Business Journey, as measured in the customer tracking study, and our other customer research.

With increasing communication to customers, we have seen a growth in customer queries and views on our Good Business Journey, and a few follow as an example of this:

HOW WE HAVE RESPONDED TO OUR CUSTOMERS

Customer feedback or query Woolworths response
Woolworths has a number of recyclable containers that it sells to customers. As a Woolworths customer who cares as much about the environment as Woolworths does, I would suggest Woolworths have bins in their stores where other customers like myself can drop the recyclable containers in. We have two pilot customer recycling programmes running at present – one at eight Woolworths Food standalone stores, and one in conjunction with Engen and Nampak at 12 Engen service stations. We are expanding the Engen project to 22 sites in Gauteng, and will further assess customer response before deciding on the next stage of the programme.
I was mortified to see kingklip (status: orange) for sale. Why is Woolworths prepared to sell fish that are on the threatened list? Surely that is against the principles of sustainability and carefulness that Woolworths says it stands for? Kingklip is orange on the SASSI list not because of the stock status, but rather because of the impact of the fishery on by-catch such as sea birds. Our kingklip is sourced from MSC trawled hake suppliers who make use of highly effective by-catch mitigation devices such as “Torry lines” to scare off birds and thus, to a large extent, preventing them from getting caught.

It should be noted that there are fishery improvement projects underway to make the kingklip fisheries more sustainable and from a retailer side we are asking our suppliers to get MSC certification on kingklip which would be a guarantee of its sustainability.
Woolies, as long as you import out-of-season avo’s etc, at great cost, you are PART of global warming. Woolworths supports the concept of seasonality, but at the same time, where there is demand for a product throughout the year, we do have a business imperative to offer our customers that particular product.

In the case of avocados we are busy working with our primary avocado supplier to bring small scale suppliers in other parts of the country into the supply chain, with the hope of achieving local availability of avos all year round in the next few years.
Are the plastics that Woolworths use to sell their Woolworths range in, biodegradable? As a general rule no, due to compostable packaging generally being two to five times more expensive than conventional packaging.

We also have concerns about biodegradable packaging contaminating recycling streams.
What exactly is meant by “Farming for the Future” which I see on some of your fresh produce? Farming for the Future is Woolworths holistic approach to farming and aims to help farmers grow quality produce while protecting the environment, preserving natural resources and reducing dependence on chemical fertilisers, herbicides and pesticides – all without adding anything to the price the consumer pays at retail.


Employee understanding and backing for our Good Business Journey programme is measured through our annual people survey – “Let’s Ask”, which has shown high levels of support, and a growth in this level of support over the last year. This year 74% of the scores in our Let’s Ask staff survey were positive compared to 64% last time.

Far more difficult to quantify is the innovation and enthusiasm of employees across the business in integrating sustainability thinking into their daily jobs, and bringing new projects to life that have changed the way we operate.

We are also focused on communicating sustainability issues and our response to them to our employees so that they can apply this thinking at work, and in their own homes, as well as better engage with their colleagues and customers on these issues.

We continue to engage with representative unions on issues related to wages and conditions of employment.

Maintaining and growing our credibility among shareholders and the broader investment community is a key objective. This is done by providing relevant, timeous and transparent communication using a variety of different media to allow
far-reaching access to information, ensuring all our shareholders enjoy a thorough understanding of our performance and strategy going forward. These efforts include analyst presentations, attending investor road shows, store walkabouts with investors and analysts, webcasts and our annual Integrated Report.

We have made particular effort over the last year to engage with, and update investors who are focused on environment, social and governance issues, on our progress and we strongly support the Code for Responsible Investing in South Africa, which encourages institutional investors to incorporate sustainability issues into their investment decisions. Our responses to the Dow Jones index, JSE SRI Index, Carbon Disclosure Project (CDP) and other assessments is an important part of building an engagement with the investor community based on transparency, and consistent performance regarding sustainability issues.

Raising the profile of the key sustainability issues in South Africa is an integral part of Woolworths commitment to the Good Business Journey. Woolworths ongoing engagement with the media has been an important aspect of managing the company’s corporate reputation as well as raising awareness of key sustainability issues. A key development during the year was a partnership with environmental programme 50/50 on SABC 2 to broaden exposure around our Good Business Journey programme. We continue to see a significant portion of our media queries being related to the Good Business Journey.

RAISING AWARENESS OF THE KEY SUSTAINABILITY ISSUES IN SOUTH AFRICA IS AN INTEGRAL PART OF WOOLWORTHS COMMITMENT

Woolworths operates a tightly integrated network of suppliers, to ensure exacting quality standards and forms long -lasting relationships with its suppliers. Through supplier conferences and forums these relationships are developed further. We have pursued a strong preferential procurement and enterprise development agenda with our suppliers within the context of our transformation commitments. Conformance to the Woolworths supplier code of business principles is a prerequisite to ensure social and environmental responsibility across the supply chain.

During the course of the year we bought back the majority of our local franchise operations as part of a change in strategy for the business, but will continue our Engen partnership and move to a joint venture model for our operations in Africa.

Experience has shown us that most sustainability challenges cannot be solved by one company acting alone, and we are excited about the support we have received from our suppliers and specialist non-profit organisations in implementing programmes like Farming for the Future, and the many things we have learnt from their efforts. These sustainability initiatives have often been a natural extension of the long-standing partnerships we share with our suppliers, as well as corporate partners such as ABSA and Engen, and have allowed us to formulate unique, and often farm -specific, responses to biodiversity, transformation and other objectives.

Woolworths also partners with a broad range of non-profit organisations across a range of environmental, social and transformation issues. This includes the Worldwide Fund for Nature (WWF), Conservation International, Food & Trees for Africa and Heartbeat, amongst others. Through these relationships we support the good work being done by these partner organisations, but also gain the benefit of their experience and input into our strategy.

We support the efforts of Government and the Regulatory bodies established to implement and monitor the legislation supporting Government’s agenda. We provide input to new policy and legislation via our membership of business and retail-specific organisations such as Business Unity South Africa (BUSA), the Retail Association and the National Business Initiative (NBI). We have aligned our key sustainability priorities to those issues facing South Africa, and have had specific interactions with government departments around employment equity and transformation, sustainable agriculture, social development, and food safety, amongst others.

The following spread illustrates our stakeholder engagement programme in more detail:

Stakeholder group and why we engage Key issues for engagement How we engage How we have responded/adapted
Customers:
  • to understand our customer needs; enhance the Woolworths brand; and thereby grow revenue.
  • we have seen improvements in understanding measured via the customer tracking study.
  • Value
  • Customer service and rewards
  • Product choice and development
  • The Good Business Journey
  • Advertising and in store communication
  • Customer contact centre
  • Focus groups and surveys
  • Social media
  • Loyalty programme – WRewards
  • Ongoing product development and innovation
  • Business focus on key issues, for example availability, product choice (bigger sizes), value, store location and service
  • Adopting methods of communication to meet customer preferences (increased social media)
Employees:
  • to share relevant information and get input and feedback, as well as to develop a high–performance organisation.
  • significant improvements in Let’s Ask employee opinion survey results.
  • Communicating strategy and business developments
  • Reward and recognition
  • Training and development
  • Employee wellness
  • The Good Business Journey
  • Intranet, e-mail, store communications, Shoptalk magazine
  • Let's talk team meeting methodology
  • Let's Ask people survey
  • Focus on employee wellness–employee development, remuneration and benefits updated
Unions:
  • to engage on collective employment issues.
  • Wages and conditions of employment
  • Retail and textile sector issues
  • Regular meetings
  • Participation in CCMA, Nedlac and other labour market institutions
  • A better understanding and response to employee concerns
  • Revision of remuneration and benefits policies
Suppliers:
  • to deliver consistent quality and standards; and drive new and innovative product, which also furthers the ambitions of the Good Business Journey.
  • Timely payment and favourable terms
  • Product innovation
  • Partnering on sustainability solutions and Broad-based Black Economic Empowerment
  • Supplier conferences and visits
  • Supplier audits of our code of business principles
  • Review of product offering and ongoing innovation
  • Revised code of business principles
Franchisees:
  • to ensure a consistent customer experience.
  • Fair price for acquisition of local franchises
  • Partnership expansion in Africa
  • Ongoing electronic and personal engagement, including meetings, an annual franchise conference and regular franchise buying weeks
  • Negotiated sales for willing franchisees
  • Engen expansion
Shareholders and investors:
  • to create an informed perception of Woolworths, ensure more accurate expectations and create a positive investment environment.
  • Business performance
  • Business expectations and strategy
  • Economic, social and environmental concerns
  • Annual general meeting/general meetings
  • Bi-annual analysts’ results review
  • Individual, documented analysts’ meetings
  • Reporting, webcam and website updates
  • Integrated Reporting
  • Increased electronic communication tools
Media:
  • to influence stakeholder perceptions, build the Woolworths brand and market the business and products.
  • Business and consumer issues
  • Macro-economic issues that affect retail
  • Product information
  • The Good Business Journey
  • Ongoing electronic and personal engagement
  • Interviews
  • Press releases
  • Publications
  • Ongoing review and challenging of business practices
  • Improved transparency
  • Improved information provision
Business partners:
  • to gain support and leverage on issues of common interest.
  • Strategy and product expansion
  • The Good Business Journey
  • Joint projects
  • Partner re-views
  • Co-ordination of retail input to textile and clothing issues
  • Participation in specific initiatives, for example the NBI’s Energy Accord, COP 17 CEO forum
Government and regulators:
  • to discuss issues of mutual concern, optimise opportunities and minimise risks of regulation, as well as to anticipate and assess potential policy and regulatory impact.
  • Trade and industry policy on Sector development, trade issues
  • Labour market issues
  • Food standards and agricultural issues
  • Consumer credit and protection issues
  • Education
  • Transformation and the Good Business Journey
  • Ongoing electronic and personal engagement
  • Drafting of submissions
  • Participation in research
  • Meetings with government officials and ministers
  • Nedlac, BUSA and business associations
  • Consolidation of combined retail positions as input to government
  • Sharing of information on business practice with government
  • Revision of processes to become compliant to new legislation such as the Consumer Protection Act
Non-profit organisations and communities:
  • to contribute to the society in which we trade, and get input into our strategic aims.
  • The Good Business Journey
  • Education and capacity building on relevant community issues, e.g. nutrition
  • HIV/AIDS awareness
  • Input to our product strategy and range
  • Ongoing electronic and personal engagement
  • Joint projects
  • Ongoing modifications to product strategy and range
  • Greater transparency and communication, for example labelling