Since being founded in Sydney in 1924, Woolworths Ltd had grown to be number two of the top 2000 companies in Australia by 2015. It now dominates the hypercompetitive Australian supermarket sector (worth in total 6 per cent of the nation’s gross domestic product). With its 3000 stores across Australia and New Zealand, and more than 190 000 employees, it serves over 28 million customers each week. Operating profits exceed $60 billion. However, Woolworths and its chief competitor Wesfarmers (owner of Coles Group Limited) now face efficient and successful rivals: the German discount supermarket Aldi and the US membership warehouse club Costco. Both Woolworths and Wesfarmers exhibit high levels of total liabilities compared to their total tangible assets, due to goodwill and intangibles making up a significant proportion of total assets. Although both have strong operational cash flows, this may mean they carry higher risk in a trade downturn if they need to rely on increasing borrowings to fund capital expenditure.3 Add to this the predictions that 2015–20 will offer challenging conditions for the retail sector generally, and the task facing the Woolworths management team is significant. For example, does it stick with its espoused mission statement: ‘[Woolworths is] built on a passion for retail, attention to detail, working hard, ensuring the safety of our customers and our people, and having fun. Our mission is to deliver to customers the right shopping experience — each and every time’?

It sounds good, but is the customer really likely to prefer an explicit mission for the employees to ‘have fun’ over an option to have lower prices? What might this ‘right shopping experience’ be? Rivals with lower prices pose a threat. Fresh food, convenience and value for money might not be enough. How good does Woolworths have to be to attract customers from its competitors, or at least to retain those customers it still has?

What are the options available to the decision‐makers? Does it offer a scheme to build customer intimacy, and thus loyalty and share of the shopping basket? Does the management team invest time and money in innovative software to extract value for the shareholders from the digital revolution? Will mobile platforms and online shopping change everything or just some things? Will flatter organisational structures improve internal communication and capitalise on implicit knowledge? In short, is there a management choice between strategies aimed at increasing customer intimacy and loyalty, those aimed at operational efficiency and those targeting organisational integrity and brand leadership?

Woolworths is not alone in confronting such challenges. What kind of workplaces are likely to be needed to support this new trend for innovation and flexibility, with improved efficiency and productivity? What can managers do to create them?

QUESTION

How has the workplace changed in the past twenty years and what are the implications of the changes? Where are the trends likely to take us in the next twenty years?

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Woolworths CABECED WTH FOR e MES RECYCLE