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Wesfarmers CEO Confirms Intention To Invest Further In Online Retail Capability

Rob Scott - Wesfarmers MD - 725 x 500.jpg

Rob Scott, CEO of Wesfarmers, told guests at the virtual Macquarie 2020 Conference that the group will be making further investments in online retail as the COVID-19 pandemic continues.

Mr Scott told the audience that Wesfarmers' DIY and home improvement chain, Bunnings, is "leading the way", despite only having launched its ecommerce site two years ago.  He added that Wesfarmers would be accelerating the investment in Bunnings' digital offer, expanding its addressable market and increasing its focus on commercial customers.

In August 2019, Wesfarmers finalised the $230m acquisition of Catch Group, an established, profitable and cash-generative business that operates an online business model offering branded products on a first-party basis and a third-party online marketplace.  Scott was challenged on the cost of the acquisition, with some deeming it overpriced, but advised that the wider group would benefit from the Catch's online business skills and knowledge.

In a presentation, Wesfarmers said that following actions to reposition its portfolio, it is responding to the uncertainties of COVID-19 from a position of strength, and has a portfolio of cash-generative businesses focused on long-term value creation.

Furthermore, the retail group advised that it is "innovating and adapting in a rapidly changing environment", with divisional autonomy allowing its businesses "to quickly respond to changing consumer behaviour, supported by our digital capabilities."

"Following significant investment in recent years, our businesses are well-positioned to respond to the consumer shift to online:

– Leveraging the digital expertise of Catch, acquired in August 2019
– Acceleration of planned digital roll-out & innovation
– Drive & Collect by Bunnings & Officeworks
– Conversion of three Kmart stores to ‘dark’ stores to support growing online business"

The group reported strong sales momentum in Bunnings, Officeworks & Catch and noted a recent decline in shopping centre footfall, impacting Kmart & Target.

For Bunnings, the group reported strong sales growth as customers and their families spend more time at home, adding that it was uncertain whether the higher level of sales growth would continue for the remainder of the financial year.  

View the full presentation here.

Source : Insight DIY Team 

Image : Rob Scott - Wesfarmers CEO

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11 May 2020

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