Own Woolworths shares? Here’s how the retailer plans to combat rising wage costs

How will Woolworths deal with higher wages for staff? Let’s take a look.

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Key points

  • Woolworths shares are in the red today 
  • Woolworths plans to deal with higher wages with boosts in productivity and technology 
  • CEO Brad Banducci has previously indicated he supports higher wages to keep up with living costs 

Woolworths Group Ltd (ASX: WOW) has revealed how it plans to counteract higher wages. Woolworths shares are currently trading at $34.16, a 2.59% fall. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is down 0.5% in late afternoon trade.

Additionally, Coles Group Ltd (ASX: COL) shares are sliding 2.22%, while Wesfarmers Ltd (ASX: WES) shares are dropping 1.76%. The S&P/ASX 200 Consumer Staples (ASX: XSJ) index is 2.39% in the red today.

Let’s take a look at how Woolworths plans to deal with potentially higher wages in the future.

Boost productivity

Woolworths plans to improve productivity and invest in technology to combat rising wages, the Australian Financial Review reported. A spokesperson for the company told the publication:

Like all good retailers, we will continue to focus on productivity across our business including looking at process improvement opportunities and investment in technology to sustainably reduce the effort required by our teams.

These productivity changes could include improving the efficiency of the Direct to Boot Groceries service, improving scanner technology for home delivery, and a new internal app to help staff swap shifts.

In the company’s third-quarter sales results in early May, CEO Brad Banducci expressed support for wage increases for staff. He said:

We also support the Australian Retailers Association’s position for an increase in team member wages that keeps pace with underlying cost-of-living increases.

Incoming Labor Prime Minister Anthony Albanese said before the election he supports a wage rise of 5.1%, in line with inflation.

In comments reported by Sky News he said: “We think no one should go backwards. People should be at least keeping up with the cost of living.”

Woolworths share price snapshot

The Woolworths share price has fallen by 7.5% in the past year, while it is down 10% in the year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned less than 1% in a year.

Woolworths has a a market capitalisation of nearly $42 billion based on today’s share price.

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 Scott Phillips.

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