Woolworths (ASX: WOW) share price up amid new ‘dark store’ plans

The retail giant has submitted plans to open a new online customer fulfilment centre in Sydney

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The Woolworths Group Ltd (ASX: WOW) share price is in the green. By close of trade today, shares in the retailer were selling for $38.21 – up 0.53%. For context, the S&P/ASX 200 Index (ASX: XJO) ended the day 0.02% lower.

The positive price rise comes after The Australian reported Woolworths will be launching its first ‘dark store’.

Let’s take a closer look at the news.

Woolworths’ new dark store

Woolworths has submitted plans to open a dark store in the southern suburbs of Sydney. A dark store is only for the fulfilment of online orders – including pick-up for the first time, and delivery.

The Australian says this facility is just one of several similar sites that will be developed as the company focuses on online and suburban sales.

“To keep pace with customer expectations, we’re planning to open a new customer fulfilment centre in (southern Sydney) to offer more delivery windows and an even more reliable service to our online shoppers,” Woolworths director of e-commerce Annette Karatoni told the paper.

E-commerce sales increased 63% across the group in the third quarter of FY21 to $1.3 billion. Its Australian food division saw e-commerce revenue increase 90.5% to $878 million. E-commerce sales for New Zealand food, Big W, and the now demerged Endeavour Group Ltd (ASX: EDV) increased 37.9%, 34.8%, and 23.8% respectively.

Investors don’t seem to mind this expansion into digital sales, judging by the 17.4% rise in the Woolworths share price over the past year.

The company has 3, soon to be 4, of what it calls “micro-fulfilment centres” that act in a similar capacity, but for delivery orders only. Woolworths also said it would build an automated customer fulfilment centre in Auburn in Sydney’s western suburbs.

Woolworths share price snapshot

Year to date, Woolworths shares have increased around 12.7%. That includes the 15% fall in value the company saw on the day of its demerger with Endeavour Group.

The current Woolworths share price is only 70 cents lower than its 52-week record of $38.91.

Woolworths has a market capitalisation of around $48 billion.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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