Woolies’ secret supermarket project
IF YOUR usual idea of a Woolworths is a large store with multitudes of aisles, a deli, and a liquor store to the left as you leave, you may need to think again.
Woolworths is putting the finishing touches to a new concept store that is so tiny it has only a single aisle.
About 40 times more compact than a usual store, Australia's smallest ever Woolworths has been shoe-horned into the site of a former coffee shop at the bottom of an office block.
The store will also be Woolies' first ever completely cashless store - with no notes or coins accepted. But it's slight nature means there is one big selling item it won't sell.
The company hadn't made an official announcement, but news.com.au spied an under-construction store in inner city Sydney which sported the never seen before "Woolworths MetroGo" branding half hidden under plastic. Inside staff were scurrying to fill the shelves.
The company, which has more than 1000 much bigger branches, has now given news.com.au exclusive access to the unique branch.
Woolies said the store - which opens next week - aimed to "push the boundaries of convenience". But a retail watcher said if Woolworths rolled out the MetroGo stores it could a "real threat" to 7-Eleven.
The new store will open just days after Woolworths confessed to underpaying some staff by as much as $300 million, including staff in smaller stores.
A usual Woolworths is about 2500sq m in size. The firm's Metro branded smaller format stores, which have an emphasis on food to go, are about 500sq m. This store is a mere 50sq m.
Where the average Woolies might stock 7500 products, MetroGo has 655. Just two staff will man the store.
The pint-sized supermarket is located in the Strawberry Hills neighbourhood of inner city Sydney, close to the busy Central station. However, it's still hidden away, a block from a main thoroughfare. That's no mistake - it's on the ground floor of the building that houses the retailer's online and innovation arm.
Woolworths Metro stores general manager Justin Nolan told news.com.au the new shop was primarily designed for the company's employees - but anyone could walk in.
"We wanted to push the boundaries of what convenience looks and customers tell us they want to get in and out quickly," he said.
Last year, a senior Woolworths executives let on that customers, particularly in inner city areas, were increasingly "ambivalent towards cash" and new CBD stores had fewer registers that took notes and coins.
But the Strawberry Hills store is the first to do away with cash entirely. There are also no self serve check-outs.
"There's no notes or coins. We're calling it cashless convenience," Mr Nolan said.
Customers can pay by card or tap their phone. It will also be one of fewer than 10 stores where shoppers can use the Woolworths Scan & Go app which allows customers to pay for their shopping and bypass the checkout completely.
Mr Nolan said signs on the store's exterior would warn customers of the no-cash policy.
TINY STORE. SMALL RANGE.
Squeezed into the store are cold drinks, a handful of hot and cold bakery items, salads and sandwiches, yoghurts as well as some everyday essentials. Half the store is fresh packaged food or fruit.
"It's biased towards healthier food and has a very tight range focused on breakfast, lunch and snacking," Mr Nolan said.
The key word missing here is "dinner". There isn't the room and Woolies thinks MetroGo customers won't be that fussed beyond a clutch of ready meals and pastas. It may be the "Fresh Food People" but there's very little loose fresh produce.
Its hours will be just 6am to 6pm on weekdays, doubling down on the office workers market.
You can pick up milk, bread, eggs - and lots of kombucha - but there's another key item you won't find: tobacco.
"We didn't think it fitted. Tobacco is not a small offer to put in and we thought food is what we're really about so made the choice not to," Mr Nolan said.
According to market research firm IbisWorld, the convenience store industry is worth $4.7 billion annually with 7-Eleven controlling almost 10 per cent of the market.
Growth is expected to decline by 0.7 per cent annually. However, city centre convenience stores that sell food to go, like MetroGo, are best placed to prosper.
But it's another area of the shop that provides a clue as to what the real money-spinner might be. A good chunk of the branch is a takeaway coffee shop.
City dwellers will be able to order their coffee in store or via an app and then receive it through a hipster-style hatch without having to set foot inside. They can then drink it at tables and chairs outside, shaded by a large tree. It's all very al fresco.
IbisWorld data showed takeaway coffee brings in about $10 billion each year, twice the revenue of convenience stores. And this market is growing.
"We see a great correlation between coffee, breakfast and lunch and the (Woolies' staff) upstairs really asked for it," Mr Nolan said.
But with Woolworths employees making the coffee, it's unlikely they will be able to offer a flat white for just $1, as 7-Eleven does from its machines.
7-ELEVEN UNDER THREAT
Queensland University of Technology retail and marketing expert Gary Mortimer said Woolies' MetroGo was an example of a "micro retailer" and a new front in the supermarket wars.
"The real threat here is to 7-Eleven, NightOwl stores and the mini IGAs that were always found in high density areas and beneath residential towers," he said.
"It's these that have the most to lose as Woolworths and Coles move into micro, hole-in-the-wall-type stores."
It was a clever move, he said, to have a presence in high traffic areas.
"The rents in (CBDs) are astronomical, so having smaller stores means you can cut your rent bill, and you only need a few staff to run a store," Prof Mortimer said.
The target market was the same as for the established Metro stores, he said: time poor commuters streaming through major CBDs or to and from railway stations who wanted to grab food for now or later.
Mr Nolan insisted it was a merely "test and trial store" to look at the take up of Scan & Go and what products to stock in a small space. MetroGo is a one-off, for now.
"7-Eleven don't need to worry yet," he said.
Nonetheless, he wouldn't rule out further MetroGo stores in the future. Indeed, a search of IP Australia's trademark database shows Woolies has gone to the trouble of trademarking the MetroGo brand.
Woolworths also recently opened a one-off store called The Kitchen in the ritzy Sydney suburb of Double Bay that sells only "good for you" and organic foods. It includes kombucha on tap.
Last year, Coles opened its first small-format "local neighbourhood supermarket" in Melbourne's Surrey Hills.
Dubbed Coles Local, the new store is about half the size of a full supermarket at 1280sq m and features gourmet local produce, specialty ranges, an in-store chef and barista and a "Foodie Hub".
It's Coles' answer to the smaller Metro stores.
However, Coles is playing catch-up to Woolies. It only has a handful of Coles Local stores open and nothing in size to compare to the new Woolworths MetroGo.
Woolworths' were cagey on the how much they've shelled out on the new store and how long they would stick it out for if the customers failed to materialise. But Mr Nolan was confident it would be a winner.
"It's a great opportunity to continue to evolve and test new things and I think we'll be here for a while," he said.
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