On the back of posting one of its worst ever profit slumps, Woolworths chairman Gordon Cairns fronted hostile shareholders at the retailer’s annual general meeting last week. In his address to the AGM he outlined a number priorities, the first being the urgent revival of the supermarket business that accounts for 70% of Woolworths’ revenue.
Woolworths’ woes began in mid-2014 when the retailer lifted its prices to preserve its margins. Coupled with ignoring its ‘fresh food’ brand promise, positioning the brand as cheap but failing to deliver, neglecting run-down stores and underestimating the impact on customer service of unhappy staff, this led to customers abandoning the brand in droves.
For brands like Woolworths, therein lies the challenge. Word-of-mouth recommendation is now considered to be the most credible and trustworthy source of buyer information. Today, what gets experienced gets talked about in real-world conversations, online discussion forums and in social media.
Cairns acknowledges he has his work cut out, the task at hand revealed by leading consumer research companies such as Canstar Blue, Roy Morgan and Forrester. Forrester’s latest report on customer experience shows both Woolworths and Big W as two of the lowest scoring brands on the Forrester Customer Experience (CX) Index.
When he last faced the media, Cairns said he would turn Australia’s biggest retailer around by appointing a strong leadership team and putting customers first. In his AGM address on Thursday he further outlined the need for cultural change by putting the customer at the centre of every decision and announcing his intention to “restore the culture of customer centricity”.
As is always the case with strategic change of this magnitude, the new leadership team will need to follow in Cairns’ footsteps by ‘walking the walk’, demonstrating the importance of customer-first by embedding the customer vision into the company’s culture and developing principles to guide future decision making.
For customer experience initiatives to successfully deliver customer value, competitive advantage and sustainable growth, Woolworths will need to embrace transformation rather than step-change.
Fundamental to this will be organisational alignment around the customer agenda; bringing together all areas of the business to ensure a collaborative and closed-loop sharing of customer intelligence to meet customers’ needs and foster positive word-of-mouth recommendation.
Once this collaborative mindset is in place, the leadership team can begin to work together with their in-store teams to determine what strategies and actions are needed to deliver a customer-first culture.
On its agenda will be reigniting the brand with a powerful purpose and seamlessly delivering the brand promise, ‘Fresh Food People’ across every touchpoint.
Add to this a customer–first approach that will inform everything they do, building a culture where the brand exists to serve its customers, empowering frontline staff to fix customer problems and leveraging their data to innovate competitive offerings that meet and satisfy customer needs.
First steps have already been taken with Cairns revealing: “The most important people in our business are our frontline staff, for they interact with the customers on a daily basis. They know what we need to do better, and we must listen to them, and empower them to act.”
This direction coincides with a newly introduced employee performance measurement system, replacing the existing 20-point scorecard. The simplified customer-metric scorecard is designed to help in-store teams deliver better performance.
The business has also established a new division called Woolworths FoodCo with its main responsibility being product innovation across fresh produce, processing, supplier partnerships and ready-to-cook meals.
On his first day Cairns stated: “If you put customers first, profits take care of themselves.” His customer-first vision, where customers are recognised as the most important asset of the business and customer experience becomes a whole-of-business approach, could well see the anticipated revitalisation of the Woolies brand.
Alex Allwood is the author of Customer Experience is the Brand and CEO of The Holla Agency.