If Australian supermarket giants Woolworths and Coles don’t have enough competition on their plates, they’re about to face another player as David Jones eyes the food business.
David Jones along with Country Road was bought by South African operated Woolworths Holdings last year for $2.2 billion. Since the acquisition David Jones has seen increased sales however the company is now planning to turn around their ageing food halls and also add stand-alone food stores.
South African owned Woolworths is a chain of retail stores very similar to the likes of David Jones, however Woolworths offers food and groceries and also incorporates stand-alone supermarkets. The company generates almost 30 percent of its earnings from food and is one of the nation’s fastest growing food retail chains.
The company has in the past played down speculation that it will enter the Australian food and grocery market due to a lack of supplier base. They have since revised their thinking and plan to use their prior food retailing experience to turn around David Jones’s current food offering and establish food stores similar to their South African Woolworths supermarkets.
"Food and food services are important elements of the existing and future David Jones and as in all areas of our stores we are focused on providing our customers with a continually improving experience and product offer," a Woolworth’s spokesperson told Fairfax Media on Wednesday.
Recent months has seen a dust storm in the Australian supermarket industry as aggressively growing Aldi has been taking market share away from the supermarket giants Woolworths and Coles. This is on the back of news that the German owned food retailer Lidl, have also announced plans to enter the Australian market. Woolworths and Coles for many years maintained significant control over the market, however with the growth of Aldi and the probable entrance of two major players, we have all the right ingredients for a colossal price war in the near future.
Author: Simon Herrmann
Jun 25, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.