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13 November
Comments Off on Coles plays catch-up with Easter checkout promise

Coles plays catch-up with Easter checkout promise

Coles is playing catch-up to an overstaffed Woolworths with its promise to boost checkout operators for the busy Easter weekend, according to broker UBS.
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On the eve of the second busiest shopping week of the year, analyst Ben Gilbert said industry insiders suggested Coles started to “ramp up” staffing as early as March this year following a “relatively weak” January and February for the supermarket chain.

“While this is partly due to Coles cycling stronger numbers in the previous corresponding period, the relative degree of investment at Woolworths has made it harder for Coles to take market share, requiring it to take action,” Mr Gilbert said.

“Coles’ ‘I’m Free’ campaign focused on opening about 10,000 extra checkouts across the country over the weekend of 8-9 April, which we believe was in part in response to the visible benefits of increased investment at Woolworths.”

The Wesfarmers-owned Coles announced it would open an additional 13,570 checkouts on Wednesday, Thursday and Saturday this week to cut down on waiting times at its chain over Easter but it denied this was in response to Woolworths.

Coles dismissed the UBS analysis, claiming the broker didn’t visit enough Coles stores to draw any meaningful conclusions, however, its investment in bumping up staffing for Easter and before Christmas suggests the chain has identified staff increases as an “opportunity,” according to one market watcher.

“Coles clearly thinks there is an opportunity associated with increasing staffing levels,” he said.

By comparison UBS said Woolworths had “over-invested” in labour but its staffing decisions hadn’t been as “thoughtful or forensic”.

“It begs the question as to whether Woolworths has over-invested or Coles has cut too hard and is now responding via investing more,” Mr Gilbert said.

“We believe it is likely to be a bit of both … over time a more sustainable level of staff investment should incorporate a gradual wind-down of Woolworths’ labour investment, while Coles gradually invests more as it experiences mean reversion.”

Woolworths claims its adjusted its staffing levels to reflect changing shopper patterns.

Woolworths supermarkets director of stores, Michael James said it was all about ensuring the chain had team members in store, at the right time, in the right departments and on the right days.

“We have also increased team members in the fruit and vegetable section to meet the growing customer trend for fresh food,” Mr James said. ??? ??? “This commitment to team members in this department has been recognised by our customers, with ongoing item growth in fresh produce.”

Coles’ lower labour costs make it more profitable, according to UBS but the broker has forecast Woolworths’ food margins will overtake Coles in fiscal 2019 as a result of better execution across “key aspects” of its business.

“The most material opportunity will in our view be labour based on the analysis of store staffing, while we acknowledge our sample size is small, it is consistent with commentary from Woolworths management and recent (staffing) initiatives at Coles,” Mr Gilbert said.

This story Administrator ready to work first appeared on Nanjing Night Net.

 
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