Woolworths Tough Times

Case : Woolworths – During Tough Times – 2008 – 09

Question 1

By dropping prices and increasing product range, is Woolworths diluting its value proposition?

Woolworths believes in value for money, offering good quality at affordable prices. By dropping their price points to accommodate their customers during difficult times, while not compromising on quality, leads me to believe that they are not diluting their value proposition.

The way in which Woolworth went about reducing their pricing was engaging with suppliers, reducing packaging, improving logistics and monitoring the cost of lower commodity prices like wheat rather than source inferior quality products.

By increasing the product range in the food stores, Woolworths was actively shifting itself from a delicatessen type food store environment into a supermarket type store, which was already part of their strategy. Having the additional products meant that Woolworths was able to cater to the different segments of the market, and increase its market share by drawing customers away from the likes Pick n Pay potentially, who would do shopping in Woolworths for some of their goods and Pick n Pay for the balance. Having additional products to meet their customers needs, while not compromising on quality at affordable price points speaks to the Woolworths value proposition in my opinion.

Question 2

When the economic conditions change for the better, should Woolworths withdraw some of the added products?

No, Woolworths should not withdraw some of the added products when the economic conditions change for the better. The reason I feel this way is that a new client base would have been established which will then need to go elsewhere if they are no longer able to get they products they require, and once you have a captive audience the opportunities to on sell to them are great. Based on my answer in 1 above where I have noted that Woolworths had a stated that they were wanting to move to a more...