What's Happening?
Woolworths Group has announced plans to separate Big W from its shared technology infrastructure, transitioning the department store to a standalone platform. This decision follows a reported $35 million loss for Big W in the 2025 financial year. Despite an increase in online traffic by over 20%, driven by the expansion of its third-party range through the MyDeal platform, Big W has struggled financially. Woolworths Group CEO Amanda Bardwell emphasized the need for Big W to have systems tailored to its discount department store model. The move is part of a broader strategy to improve Big W's performance and capitalize on growth opportunities in categories like pet care and health and beauty. Woolworths is also progressing with a transition from its SAP ECC5 system to S4/HANA, expected to conclude in 2026.
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Why It's Important?
The decision to decouple Big W from Woolworths' shared technology stack is significant as it reflects the challenges faced by department stores in adapting to changing market conditions. By establishing a standalone platform, Big W aims to enhance its operational efficiency and better meet the needs of its customers. This move could potentially lead to improved financial performance and competitiveness in the retail sector. The broader implications for Woolworths include the need to balance investments in technology with the financial health of its subsidiaries. The success of this transition could serve as a model for other retailers facing similar challenges.
What's Next?
Woolworths plans to build a new automated customer fulfillment center in Melbourne to increase order capacity, using Knapp automation technology to improve delivery times. This development is part of Woolworths' strategy to enhance its logistics and customer service capabilities. The retail industry will be watching closely to see if these technological investments translate into improved performance for Big W and Woolworths as a whole. Stakeholders, including investors and industry analysts, will likely monitor the impact of these changes on Woolworths' financial results in the coming years.
