WOOLWORTHS TO STEP UP EXPORTS

DAVID ORGEL

SYDNEY, Australia -- Woolworths here is eyeing Asia from down under.

The company, Australia's largest food retailer, is hoping that a fledgling export business to Asia will represent an impressive portion of its volume within a decade, Reginald Clairs, group managing director, told SN in an interview.

"The potential of the Asian market is mind-boggling," Clairs said. "There are 18 million people in Australia, while in Indonesia alone there are 180 million. There are millions of people in Asia who aren't going to be able to sustain themselves with the type of food that they're going to want."

What does Woolworths have for the Asian market that other companies don't?

The chain has been building up close alliances in recent years with farmers and growers in Australia who supply produce, meats, dairy and other products to specifications. These partnerships have enabled Woolworths to press its national fresh foods campaign called "Woolworths, the Fresh Food People." Now the retailer is ready to export this concept.

"We'll leverage off the real strengths in fresh foods and our growers in the fields for the Asian market," Clairs said. Already the company has begun exporting products to Hong Kong, Taiwan, Indonesia, Malaysia and Thailand. The exports are geared for Asian retailers, such as the Hero Supermarket Group in Indonesia. Among the early products in the program are hard fruits and vegetables, including citrus fruits and cabbages. Eventually, the venture will expand into soft vegetables and into meat, dairy products and perhaps even dry groceries, Clairs said.

"It's still in the very early stages, and may add only $3 million to $4 million Australian [$2.29 million to $3.05 million U.S. at an exchange rate of $1 U.S. equals $1.31 Australian] in the 1995-1996 year," he said. However, the goal is to work toward $100 million ($76.3 million U.S.) by the year 2000.

"Australian wholesalers are exporting, but they don't have the unique distribution facilities that we do," Clairs said. "We can collect from farms, store in climate-controlled containers and load it out overnight in airplanes.

"It's all a very small amount today, but over the passage of time, as the food revolution occurs throughout Southeast Asia, as more people demand fresh foods and nutrients, we can see ourselves becoming a significant supplier to the retailers of Asia."

The diversified Woolworths group, as reported, posted a sales gain of 11.4% to $12.8 billion Australian ($9.8 billion U.S.) in the year ended June 25. That figure includes sales of general merchandise stores, specialty retailers and other operations. Supermarket volume advanced 11.5% to $10.96 billion ($8.4 billion U.S.). The company cited increased market shares for supermarkets despite vigorous competition in the period. While Asia represents a new direction, Woolworths has by no means decreased momentum in its primary market, Clairs said. The company considers itself the national leader in creating stores that emphasize perimeter fresh foods departments. The operator continues to build retail food-service programs ranging from in-store pizzas to value-added chickens. The company will spread this concept through an ambitious unit expansion plan.

"We have a national supermarket market share of about 33% now, and we may shoot for a 40% market share by the year 2000," Clairs said. "That will be driven by new store openings. We're developing about 15 new supermarkets a year, and each year they get bigger. New stores are now around 40,000 to 45,000 square feet. About 50% of turnover is in fresh foods."

Woolworths now operates some 1,000 stores of various types, about 440 of which are supermarkets. The diverse group is 87% food-driven. The company's supermarket banners include Woolworths, Safeway, Purity and Roelf Vos.

Woolworths supermarket competition in Australia includes retailers Coles Myer and Franklin's. There are also a number of wholesalers, led by Davids. In a recent move, Davids acquired Jewel Food Stores, a 96-store chain of grocery stores, forming a new alliance in the retail sector. Clairs predicts that the major retailers will all see market-share gains in the future.

"The majors will grow at the expense of the independents," he said.

Clairs pins Woolworths' market-share gains largely on the chain's extensive market research.

"We're constantly monitoring what the customer wants, and providing it," Clairs said. "We do market research every week of the year."

Such research had helped to guide the chain in differentiating stores by demographic and geographic areas. Clairs gave the example of a store that opened recently in a suburb north of Sydney. It serves an ethnic population that includes Polynesians.

"These people have special needs, such as particular types of produce we don't normally sell," he said. "For the store's grand opening we added some 40 to 50 produce items specific to these groups. These folks found items they could never normally purchase in such volume, and word-of-mouth spread. That store took in over $3 million Australian [$2.29 million U.S.] in its first week, which is double the normal amount. That's what local marketing is all about."