How Woolworths Limited plans to beat the Amazon threat

Credit: Woolworths

Amazon has arrived and Woolworths Limited (ASX: WOW) is keenly aware of its presence.

The Australian retailer held its AGM in Melbourne on Thursday where Chairman Gordon Cairns outlined the three main areas of the board’s 2017 focus: building a customer first culture; building a customer first strategy, and, capital management.

The looming threat of the American internet giant was clearly in the air and Mr Cairns did not attempt to pretend otherwise, directly addressing the issue in his opening remarks.

“We want to be obsessive about our customers, their needs and how we serve them better,” Mr Cairns said.

“If we do not, we will lose out to those who do, like Amazon.”

Mr Cairns, who is also Chairman of Origin Energy Ltd (ASX: ORG), told shareholders how Woolworths has restored its price competitiveness with Coles, owned by Wesfarmers Limited (ASX: WES), and touched on how the company is making greater efforts to challenge Amazon in the digital sphere.

“We created WooliesX, combining Rewards and Digital to provide customers with greater choice on how they shop with us, and an offering that is counter competitive to other offers such as Amazon,” Mr Cairns said.

In other areas of Woolworths’ business, CEO Brad Banducci said the company is “very aware” of the need to improve the performance of BIG W.

“We have a new senior team and plan in place and have made some good early progress but it remains a very challenging sector and we expect that this journey will take time,” Mr Banducci said.

“We see significant opportunity to improve the performance of BIG W.”

Mr Banducci’s words came as Amazon was prepping the market with an “internal testing phase”, according to Fairfax Media Limited (ASX: FXJ).

Amazon is expected to commence its full launch today and, as such, investors will keenly watch a number of companies in addition to Woolworths and Wesfarmers.

Premier Investments Limited (ASX: PMV), JB Hi-Fi Limited (ASX: JBH), Harvey Norman Holdings Limited (ASX: HVN), Bapcor Ltd (ASX: BAP), Myer Holdings Ltd (ASX: MYR) and Scentre Group (ASX: SCG) will be among the ASX shares that investors will have a close eye on.

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Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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