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FEATURE WOOLWORTHS

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SA Mag - Issue 10 - WOOLWORTHS FEATURE

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Page 1: WOOLWORTHS FEATURE

FEATUR

E

W O O L W O R T H S

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2 www.southafricamag.com

For leading retail brand Woolworths, the relationship between economic growth, social transformation,

poverty alleviation and the environment can form a vicious or a virtuous circle. Executive Justin Smith heads Woolworths Good Journey, a five year plan

aimed at changing the way Woolworths does business. And he tells Colin Chinery that virtue is

bringing its own rewards.

greenR E V O L U T I O N

P O W E R S O N W I T H I T S

W O O L W O R T H S

Page 3: WOOLWORTHS FEATURE

For eight decades the Woolworths brand in South Africa has been synonymous with quality, innovation, and value for money.

With 10 percent market share in foods and 15 percent in clothing, Woolworth’s goods are sold across 149 corporate stores, 51 international franchise stores throughout the rest of Africa and the Middle East, and 69 South African franchise stores nationwide.

Customer service too is a distinctive marker, the 2010 Ask Afrika Orange Index placing Woolworths Clothing fi rst for service overall and fi rst for service in the Retail Clothing sub-category, and Woolworths Food achieving top spot in the Retail Food sub-category.

“We try to benchmark ourselves against what international retailers and the food and beverage sectors are doing, while at the same time bringing a South African fl avour to our sustainability context,” says Woolworths executive Justin Smith.

And in Berlin last year (2010) Woolworths remarkable achievements in another sphere were recognised when it won the Responsible Retailer of the Year title at the World Retail Awards at the World Retail Congress, for the second time in three years.

“Many people would compare us with Marks and Spencer, and we do have a strong affi liation with them. But at the same time as dealing with international challenges around the retail sector footprint, we have included within our corporate sustainability programme South Africa’s transformation and social imperatives.”

Smith heads Woolworths Good Journey, a fi ve year plan aimed at changing the way

Woolworths FEATURE

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Woolworths does business. Incorporating a series of challenging targets and commitments and centred on four key priorities - accelerating transformation, driving social development, enhancing environmental focus and addressing climate change – it was launched in April 2007 as a formalisation of Woolworths existing sustainability initiatives.

“We’ve got a strong reputation in South Africa as leaders in this area and it’s very deeply engrained in our culture. We’d been dealing with a variety of social and

environmental issues in the context of our business for many years, but in 2007 the decision was made to formalise our approach into more of a programmatic one.”

It’s increasingly obvious that sustainable growth can only be achieved through paying greater attention to the world around us than has been the case in the past, says Simon Susman, Woolworths

then CEO. “The links between economic growth, transformation, poverty alleviation, the environment and climate change can either form a vicious or a virtuous circle.

“We have used the phrase the ‘Good Business Journey’ because this truly is a journey and there are no easy solutions,” says Susman. ”We are committed to meeting the fi ve year targets we have set, and to do this we will be exploring new ways of doing things in many areas. Reaching these destinations will require signifi cant behavioural and cultural change.”

Was there external scepticism at the start of the Good Journey, a feeling that it was over-ambitious? “It was well-received,” says Smith. “We are a company known for its

We try to benchmark ourselves against what international retailers

and the food and beverage sectors

are doing

Page 4: WOOLWORTHS FEATURE

quality and leadership in a variety of areas, so there was an expectation from our customers and other stakeholders.

“We get a lot of pressure from customers and other groups if we are not on track with meeting targets within the programme. Our customer base is very much among the upper income categories that have got a fairly good awareness of these issues, social and environmental, and they want us to manage these areas appropriately.”

Woolworths programmes encouraging and protecting South Africa’s biodiversity include:

Cropplanningtoaddresstheimpactofglobalwarming.

Astrictpolicyofnotsellingproductswhichmightimpactendangeredspecies.

Theadoptionofmoreenvironmentally-sensitivefarmingpracticesthroughoutthesupplychain.

And the response from farmers; a notably independent-minded community? “It’s been a very positive reaction. In the first instance we’ve got very good long-term relationships with the majority of our food suppliers, so they are more open to sharing ideas and developing their programmes with us.

“And because a lot of the initiatives in our’ Farming for the Future’ programme are saving farmers’ money by reducing input costs like pesticides, chemicals, fertilisers, they’ve seen very clear benefits to themselves. At the same time they are seeing on-the-ground environmental benefits. So it’s been a very positive partnership all the way through.“Overall, Farming for the Future has been a huge success, and has really changed the face of our approach to agricultural suppliers.”

With a ‘South Africa First’ strategy, Woolworths tries to source wherever quality and product is available locally. Smith admits there are challenges. “Over the last few years the textile industry in South Africa has gone through a massive upheaval and a huge number of suppliers have closed or moved.

“It’s a global phenomenon, the cost

competiveness when up against China, India and Bangladesh is just not there.”

With water one of South Africa’s scarcest natural resources, Woolworths is targeting a 30 percent reduction in consumption through a programme encouraging suppliers to do the same.

“The focus has been very much on using sustainability to identify opportunities for greater operational efficiencies. As a result a lot of our resource-use in areas like energy, waste and water has been positive on the environmental side, and has big cost saving implications.”

Without a massive central budget, Smith says every programme put in place needs to be justified from a financial return perspective as well as environmental and social. “So it’s definitely not adding extra costs into the business.

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“We’ve had success with other challenges for South Africa – recycling, and on internal energy usage were we’ve had an 18 percent reduction over the last few years - a really signifi cant amount we think.

“While we are on target with all our focus areas and targets, we would particularly like more progress on water in our supply chain where South Africa has huge scarcity and quality challenges. This is a real priority issue for us.”

Success on this Good Journey is part driven through prevailing skills resources, a universal challenge in South Africa. Woolworths is active in both wider education and within its own skills advancement programme. “At a very basic level our corporate social investment is very much based on educational support, trying to bolster the education system.

“For our own staff we’ve got a very strong and broad programme around training and development, with a range of targets aimed at ensuring we refl ect South Africa’s demographic and racial mix. The only way to do this is to show that there are skills and competencies at all levels in the organisation and a talent pipeline coming through.”

Smith describes Woolworths 19,000 staff as “very passionate, very knowledgeable. A lot of the innovation in the product space comes through from the bottom up rather than being forced down from executive level. We have a strong staff involvement programme, very much driven at the business unit level with programmes appropriate to their business objectives, and this has created a lot of excitement and awareness across the organisation. It’s a very vibrant part of our culture.”

In step with skills development, Woolworths is giving priority to BEE and equity ownership plans. And employees and employers are counting the gains. “For staff from a previously disadvantaged background there’s an opportunity to immediately gain share ownership as part of the BEE scheme where they get dividends over a time and eventually inherit the shares themselves.

“This is aligning our staff more closely with the fi nancial objectives, and creating an opportunity for more than 10,000 who wouldn’t necessarily have had share holding in the past to get that opportunity.” Among other results; a decrease in labour turnover. “This is very much related to the BEE scheme, employee benefi ts, and training development. We are seeing a shifting away from fl exible labour into more full-time labour at store level.”

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Woolworths FEATURE

We have used the phrase the ‘Good Business

Journey’ because this truly is a

journey and there are no easy solutions

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How important is it for South African corporates to pursue similar social and environmental objectives?

“It’s absolutely crucial, even more so in a developing economy like South Africa because of the social upliftment work that corporates do, contributing massively to economic development in the country as a whole.

“Parallel with this, South Africa has a tremendous range of biodiversity, and this means any development has to be done in an environmentally responsible manner, particularly around areas like water, energy and waste.

“There’s a whole range of stakeholder expectations in which business must play its

part in creating economic development in a responsible way. At the same time quite forward-thinking governance codes and regulations really push companies into doing the right thing from a Social perspective.”

And for corporate South Africa as elsewhere, social and

environmental responsibility makes strategic good sense. “As a company you need to be doing the right thing to make sure you’ve got access to market customer base in the years ahead. It simply doesn’t help to have a short term focus whereby you make profi ts at all costs one year and have no future opportunities after that.”END

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the social upliftment work

Overall, Farming for the Future has been

a huge success, and has really

changed the face of our approach to agricultural

suppliers

Woolworths FEATURE

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together with renowned South African brands such as Woolworths have made significant

inroads in greening transportation within the country’s Retail sector.

IMPERIAL Logistics recently invested in four Mercedes-Benz Euro 5

specification trucks, which run on low sulphur diesel, with additives that further

reduce toxic emissions. The balance of the IMPERIAL Logistics Refrigerated Services fleet operated on behalf of Woolworths has Mercedes-Benz Euro3 specification engines to ensure that minimum emission standards are maintained.

Gavin Wilson, Managing Director of IMPERIAL Logistics Refrigerated Services says, “We recently invested in three semi-trailers and equipped one rigid unit with the ecoFridge, nitrogen based refrigeration technology that is completely harmless to the environment. It is anticipated that the use of the four ecoFridge units, in the Woolworths distribution operation, will result in the elimination of 596 tons of CO2 per year.” There is the added benefit of the absence of noise pollution when utilizing these nitrogen based units.

Early adopters of sustainability based business practices are finding that ‘green’ projects can generate savings. “The ultimate challenge, however is to find ways that ‘green’ can simultaneously reduce costs, increase revenues and improve the environment – one that South African business can take on successfully by applying its inherent innovation,” concludes de Swardt.

together with renowned South African brands such as Woolworths have made significant

inroads in greening transportation within the country’s Retail sector.

IMPERIAL Logistics recently invested in four Mercedes-Benz Euro 5

specification trucks, which run on low sulphur diesel, with additives that further

reduce toxic emissions. The balance of the IMPERIAL Logistics Refrigerated Services

As South Africa focuses more intently on issues of sustainability, supply chains hold substantial potential to contribute to the country achieving ‘Vision 2025’, which aims to improve SA’s energy mix by having 30 percent of clean energy by 2025. One global logistics player that is successfully integrating sustainability practices throughout the supply chain is IMPERIAL Logistics.

IMPERIAL LOGISTICS RAISES THE BAR IN ‘GREEN LOGISTICS’

For more information please contact:Tel: +27.11.8215500

Fax: +27.11.8731874Email: [email protected]

www.imperiallogistics.co.za

9www.southafricamag.com 9www.southafricamag.com

Over and above investing in ‘green’ technologies and assets, companies can unlock environmental and economic

benefits by making practical changes to supply chain processes and products. Addressing the problem of carbon emission and environmental pollution not only limits carbon footprint and waste, but optimises supply chain performance.

“There is a dire need to ‘green’ logistics, and transportation in particular,” says Abrie de Swardt, IMPERIAL Logistics Marketing Director. “Almost 20 percent of the world’s total delivered energy is used in the transportation sector, where liquid fuels are the dominant source and locally, the Industrial and Transport sectors combined have historically used over half of the country’s energy.

“Through making the right procurement decisions, working closely with customers and business partners and the intelligent application of supply chain modelling aided by the necessary tools, excessive and inessential transportation is eliminated,” he explains. The result is a leaner, greener supply chain.

Companies can make a number of changes with the assistance of Logistics Service Providers (LSPs). “Options for greening supply chain operations range from small process changes, such as retraining drivers, to substantial capital investments including setting up green Distribution Centres (DCs),” says de Swardt.

Temperature control logistics specialist, IMPERIAL Logistics Refrigerated Services

Page 10: WOOLWORTHS FEATURE

South Africa Magazine, Suite 9 and 10, The Royal, Bank Plain, Norwich, Norfolk, UK. NR2 4SF

TNT Magazine, 14-15 Child’s Place, Earl’s Court, London, UK. SW5 9RX

ENQUIRIESTelephone: 0044 (0)1603 343267Fax: 0044 (0)1603 283602 [email protected]

SUBSCRIPTIONS Call: 00441603 [email protected]

www.southafricamag.com

Woolworths House93 Longmarket StreetCape Town8001 South Africa

P.O. Box 680Cape Town8000 South Africa

Tel: (021) 407 9111Fax: (021) 4073939Email: [email protected]

www.woolworths.co.za