Woolworths’ Thomas Dux experiment to fail?
Thomas Dux, Woolworths latest attempt to increase their share of the grocery industry, is destined to fail, according to past history cited by Tim Morris, from New Zealand-based Coriolis Research. “I don’t think Thomas Dux will work for them. The middle market retailers that have tried to go upmarket didn’t succeed,” he told the Leading Edge Future Retail Conference this week.
Mr Morris cited the attempt by US-based Safeway to extend to upmarket retail in the 1980’s as a good example. “(Safeway) couldn’t think upmarket because they were mid-market,” he claimed. Though, it should be noted that the US-based Safeway was not as strong in their market as Woolworths currently is in Australia.
The upmarket grocer/deli sells smallgoods, quality cheeses, fruit and vegetables and primarily utilises suppliers that do not currently serve Woolworths supermarkets. The first store, in Lane Cove in Sydney, has been open for a month and consumers have responded favourably to the “experiment”, according to a Woolworths spokesman. “Customer feedback so far has been good,” he said, according to The Age. “It is a local community concept.”
Woolworths has now received council approval for a Thomas Dux store to operate in the Sydney suburb of Paddington and it is expected to open in a couple of months time.
The success of the Lane Cove and Paddington stores may lead to a steady roll-out of Thomas Dux grocers Australia-wide as Woolworths endeavour to find another avenue to growth in the grocery market via the independent grocery market. With suggestions Woolworths and Coles may now hold 70-80% of the grocery market, their options for expansion with their supermarkets are increasingly limited, and, the faster growing independent grocery market could represent their best growth opportunity.
I’m not sure whether it is acceptable to comment on a story where one is quoted, but I would disagree with your statement:
“Though, it should be noted that the US-based Safeway was not as strong in their market as Woolworths currently is in Australia.”
Safeway in the early 1980’s had a market share in the Northern California market (~20m of CA’s 50m people) in the order of 30-35%. Safeway was also at the time the largest supermarket chain in the world.
Safeway was only one example of a wide range of retailers that have launched upscale concepts and failed – SuperValu, Kroger, A&P, Coles (Am I the only person who remembers Let’s Eat?), Metro, Loblaws all come immediately to mind.
Our presentation to the conference is now online, for those interested, on the front page (http://www.coriolisresearch.com).