Can SA shoppers afford Woolies' ‘store of the future'?
Step into the Woolworths Food Emporium in Durbanville, Cape Town, and you might wonder if you've stumbled onto a Chef's Table set. You won't even notice the standard grocery store hum of fridge fans and overhead lighting, because it will be masked by steam curling from live cooking demos and scents from the Bloom Bar's in-house florist, or the bespoke sushi bar might distract you instead.
This is a podium for premium, where every shelf and curated corner forms part of the performance.
The Emporium is a pantomime of opulence, a first of its kind in South Africa – a new flagship format the retailer calls a 'store of the future'. It's bigger, sleeker and squarely aimed at the ever-thinning upper crust.
With food inflation clawing at wallets and household incomes under siege, is this 'store of the future' catering for the average South African?
When it comes to luxury groceries and offerings, Woolworths has ruled the roost for some time. According to its 2024 annual financial report, the group targets 'mid- to upper-income customers who value quality, innovation, value and sustainability'.
In a submission Woolworths made to the Competition Commission in 2018, the retailer stated that its target market falls within the Living Standards Measure 8–10 bands. These are South Africans who have the most access to wealth, have high school or higher schooling education, and live in urban and suburban areas. From an income perspective, this crowd is in the top 12.9% of South Africans who earn above R20,000 per month.
It's also worth noting that, as of that same filing, the retailer had about 210,000 active Woolworths credit cards in circulation. That number is probably higher now – with anecdotal whispers coming from retail meetings indicating that more than 80% of those card-carrying customers are fully using their credit facilities at the food store.
Despite the mounting economic pressures, there's data to suggest that indulgence, or at least health consciousness, is still on the menu.
Retail therapy
The 2024 State of Grocery Retail report by global consulting group McKinsey shows that South African shoppers across income groups want to eat more healthily – and are willing to pay for it.
According to the report, about 70% of high-income shoppers and 60% of low-income shoppers said they were focused on healthier eating in 2024. Generation Z-ers and millennials were particularly fixated on quality, organic produce and label transparency.
More than half of the surveyed South Africans, regardless of income, said they're happy to pay above market price for high-quality, healthy food.
'While we will never lead on price,' the Woolworths 2024 financial report reads, 'we will continue to provide our customers with the unbeatable Woolworths difference – that of quality, freshness, convenience, innovation and exceptional sustainability credentials – making our fair prices well worth it.'
The Durbanville store is the test kitchen for that promise. 'The Food Emporium is a pivotal part of Woolworths' broader retail strategy,' says Lindiwe Khumalo, head of Woolworths' store development and formats. 'It's the blueprint for the future, a reimagined store model built from deep customer research and trend analysis.'
The 'experience' offers a 'sensory journey' with curated sections, designed for the intuitive flow of customer behaviours. There's even an 'innovation kitchen' with live demos.
Khumalo says the emporium is not a one-off, but instead a blueprint for the expansion of more of these stores in areas where 'customer demand and community fit align'.
The app trap
But why invest in bricks-and-mortar stores when consumers are migrating online? Woolworths' omnichannel strategy, which includes its online delivery app Woolies Dash, seems to be one of its weaker links.
First launched in December 2020 after Checkers' popular Sixty60 online delivery service debuted in 2019, Woolies Dash is meant to offer speedy, same-hour grocery delivery.
Instead, it's become something of a digital Achilles heel, despite the retailer reporting 71% sales growth and 95% of orders being delivered on time.
On review sites like HelloPeter and social media platforms, users are vocal about the delivery service's frequent delays and patchy order tracking, and the problematic interface of the app itself.
One user on HelloPeter wrote: 'Woolies Dash is horrific. Order took five hours to be delivered from less than 2km away and they could only supply half the items I ordered.'
Another was more terse: 'I've never had a successful order and I cannot recommend this service.'
Out-of-stock items, bad substitutions and unresponsive customer service are common complaints.
Checkers' Sixty60, by contrast, is everywhere, with scooter fleets idling next to you at every red light. Checkers noted 1.37 million app downloads in 2024 and 1.6 billion system calls weekly, according to Shoprite's 2024 financial report.
In 2022, Checkers introduced its first 'dark store', which are physical stores not open to the public, solely dedicated to fulfilling online orders.
Woolworths followed suit last year, introducing its first dark store in the Cape Town CBD to improve product availability for online shoppers.
Will they come (and keep coming)?
The Emporium format leans into emotional retail by tapping into lifestyle aspirations over wallets. It is a move that comes with risk, especially in a market where affordability still dominates decision-making.
Roland Goldberg, associate professor in marketing management at North-West University, points to convenience remaining a motivating factor when considering consumers in multiple generational cohorts, particularly among urban professionals with demanding lifestyles.
'There is, and always will be, a market for luxury premium label items catering [for] higher-income and aspirational or status-driven consumers,' he says.
But he also cautions that retailers who want to push for premium should be careful in the South African economy. 'They should appeal to the value-conscious consumer rather than the price-sensitive consumer. Emphasis should be placed on why the customer is paying extra for the item and the benefits should therefore be highlighted.'
Khumalo says Woolworths balances its offering through a range of products that cater for different needs and budgets.
'Alongside artisanal and premium selections, customers can find everyday essentials,' she says.
Woolworths' new store concept is an experience, choreographed and curated with a very specific customer in mind. Perhaps that's the point – to stand out in a crowded market, and hoping some South Africans are willing to pay for it. DM
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