Woolworths Faces Job Cuts and Product Reductions Amid Profit Decline: What You Need to Know

Woolworths has reported a nearly 21% drop in underlying profit, driven by cost-of-living pressures and a need to offer steep discounts to attract budget-conscious shoppers. The company's profit was $739 million for the first half of the financial year, a decline despite a 3.7% increase in sales. Notably, Australian food earnings fell by 12.8% to $1.4 billion due to a two-week strike last year that cost the business $240 million in sales.

Job and Product Cuts on the Cards

Chief Executive Amanda Bardwell described the results as "difficult and disappointing". To address the situation, Woolworths aims to cut $400 million in costs, which will involve reducing support office roles and cutting down on product offerings. Bardwell highlighted that customers are cross-shopping more, particularly for non-food items like pet supplies and cleaning products, citing Bunnings as a strong competitor.

Customers Continue to Shop Around

The shift in customer behavior is a significant factor in Woolworths' decline, with more shoppers looking for specials and opting for own-brand products. Bardwell noted that customers desire to realise value, while suppliers seek less complexity in navigating Woolworths' internal systems.

ACCC Inquiry Report Likely to Impact Competition

The ongoing inquiry by the ACCC into supermarket pricing practices is expected to influence competition significantly. With Woolworths and Coles controlling two-thirds of the market share, the dynamics of pricing and competition in the sector are under scrutiny. Experts suggest that the introduction of Aldi has begun to affect margins, but it's yet to be seen whether these giants are "price-gouging" Australians. The situation calls for increased competition to benefit consumers in the long run.