Woolworths looks to reclaim its fresh food status after disappointing results

Woolworths Group CEO Amanda Bardwell seemed contrite and honest in the post-results release investor briefing on Wednesday: “This performance is not in line with our expectations.”Woolworths announced a 1.7 per cent increase in full-year revenue to $69.08 billion but a profit drop of 17.1 per cent.The group’s results were posted only a day after its rival Coles announced a 3.6 per cent increase in revenue to $44.35 billion. Woolworths’ stock price fell by almost 15 per cent by the end of the day. Investors were pessimistic about the prospects of improvement in the current year and disappointed by a 41 per cent dividend slash.The group is optimistic that it will return to profit growth in FY26 through rebuilding customer trust, honing its core offering and simplifying its operations for efficiency.“What we’ve also called out is clearly a focus on cost and capital discipline going forward,” Bardwell stated.“Of course, that’s always been in place, but we are very clear with our team that we need to uplift our focus across the board on that. We’re very focused on it,” she added.But looking beyond Woolworths’ commitment to lowering costs, its strategic priorities for the mid and long term suggest a refining of its value proposition for customers – offering less but the best.Finding its lane After headline-making decisions like shutting Mydeal marketplace, restructuring the supermarket business leadership team and handing out head office redundancies, Woolworths Group is now turning its focus to the shelves.One of The Group’s three-pronged medium-term strategic priorities is to become “the first choice for the Freshest Australian Food” – looking to live up to its slogan as “the fresh food people”.The first call to action in this plan was to focus on fulfilling its ‘Fresh Food People’ promise through the best quality, varieties and passion for ‘Fresh’.“We know we need to make meaningful shifts for customers to put us first in food,” Bardwell said.“We’re determined to win in Fresh, convenience and range while delivering meaningful value and executing consistently well. It all starts with Fresh.”The group has identified, or maybe reidentified, its fresh food range as the gateway where the supermarket shop begins. According to Bardwell, customers already recognise the supermarket’s range, but it could do a better job at showcasing its offering through its passionate team and store merchandising.Woolworths has already started rolling out changes to its supply chain to enhance its fresh produce offering.Within that plan was also a commitment to providing Australia’s best range with a simpler offer and a differentiated own-brand proposition. A similar proposal to Coles, which announced in February this year that it would cut 2500 products, 10 per cent of its total range.Instead of using its broader range and diverse product mix as a differentiator from the competition, Woolworths has decided to follow suit.“We do carry a larger range than our competitors, … but also many of our non-traditional competitors,” Bardwell said.“We’ve looked at customer sentiment but also the economics of the business – we do recognise that there’s a real opportunity to simplify our range,” she continued.However, even Bardwell admitted that it’s a delicate balance between reducing the supermarket product mix for cost optimisation while still maintaining the range that customers shop with them for. One proposed solution was for Woolworths to tailor to local communities.Customers can expect to see a reduction in the Woolworths range over the next six to 12 months.