Woolworths has set up an independent internal unit to respond to competition from US internet giant Amazon when it launches in Australia next year.
In the annual meeting with shareholders yesterday, Woolworths said the team is different to that which meets with Coles and Aldi, and was established to specifically respond to the threat by Amazon.
According to The Australian, US retail executive Kathryn Tesija has been providing “coaching and insights”.
“They are a formidable competitor,” Tesija said. “They are somebody we should take seriously.”
News broke this month that Amazon was planning an entry to the Australian market and wants to “destroy” competitors. It plans to launch a fresh food catalogue, competing with the key strategic pillars of the major supermarkets.
“We spoke to the guy rolling out Amazon’s business here in Australia and in his words: ‘We are going to destroy the retail environment in Australia’,” Watermark Funds Investment chief investment officer Justin Braitling said.
Amazon is also expected open distribution and performance centres in every state.
“They will also be putting physical stores on the ground which I don’t think anyone knows about,” he told the AFR.
Woolworths responded to Amazon’s challenge by pushing the quality of its produce and local supply.
“We’re proud of our fresh food credentials, with 96% of all our fruit and vegetables sourced from Australia,” said a Woolworths spokesperson.
“Woolworths always welcomes competition. We are focused on putting our best foot forward every time, irrespective of what our competitors do.”
Woolworths is in the first year of a major turnaround of its supermarket and general merchandise businesses.
In February, Woolworths posted a loss of $972.7 million for the first half of the financial year, its first for more than 20 years, driven by a massive $1.9 billion write down in the value of the troubled Masters hardware business.
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