Big W CEO, Sally MacDonald slashed Buying staff and restructured their overseas sourcing last week. In a move that will significantly reduce costs, boost earnings and accelerate their shift towards becoming a ‘product and design led retailer’, 40 Buyers and Assistant Buyers were affected.
Article source: WA Today
Big W boss Sally Macdonald has pre-empted a strategic review by Woolworths chief executive Brad Banducci, slashing buying staff and restructuring the discount department store chain’s overseas sourcing.
In moves that will significantly reduce costs, boost earnings and accelerate Big W’s shift towards becoming a product-and-design-led retailer, Ms Macdonald sacked about 40 buyers and assistant buyers from Big W’s head office last week.
Big W’s direct sourcing operations in Hong Kong have been separated from Woolworths’ food and grocery sourcing operations and a senior Big W executive, Jeff Vickery, has been posted to Hong Kong as head of quality, sourcing and production to strengthen the group’s direct sourcing channels.
Ms Macdonald confirmed the job cuts on Monday, saying “necessary team adjustments have been made across our business to ensure we are choosing and creating the best brands and products for our customers.”
“While buyer numbers have been reduced and some buyerships have been consolidated, we are in the process of recruiting more than 30 new designers across fashion, industrial, graphic and digital to form a centralised and rejuvenated design team,” Ms Macdonald told Fairfax media.
The moves come barely a month before Mr Banducci is due to complete a group-wide strategic review and a shake-up of Woolworths’ corporate and shared services functions by June 30. The portfolio businesses will also have separate governance structures and will be overseen by separate subsidiary or joint-venture boards.
Insiders and shareholders believed the strategic review could be the precursor to demergers and assets sales of Woolworths’ Big W, hotels, and petrol operations to enable the retailer to focus on fixing its core food and packaged liquor businesses.
Announcing the review this month, Mr Banducci played down the prospect of immediate asset sales but said Woolworths would take a more objective approach to its portfolio of businesses.
Ms Macdonald, who took the helm of Big W in January, is aiming to slash costs, rejuvenate the Big W brand and reinvigorate sales growth by improving the product range, strengthening the chain’s internal design capabilities and sourcing more stock directly from overseas.
Ms Macdonald, the former chief executive of Oroton, this year appointed former Oroton design director Ana Maria Escobar to the newly created role of general manager of creative, which includes design, marketing and online.
She has also been seeking new sources of supply and has recently established a sourcing team in Bangladesh and mainland China to supplement the Hong Kong buying office.
“Big W is transitioning to a direct-sourcing model for our own brand business and we are working closely with any affected local suppliers and product agents to ensure a smooth and fair transition. We will honour all our contractual commitments,” she said.
“These changes to our sourcing operations will allow us to have complete transparency and direct control over our entire product development process, from design and manufacturing through to delivery to customers in stores.”
However, Ms Macdonald has warned that the turnaround will take time and it will be at least six to 12 months before most of the new products reach stores.
Big W’s earnings fell 39 per cent to $67.3 million in the December half and Mr Banducci warned this month that the chain would report a full-year loss, its first since the 1990s, after plunging at least $70 million into the red in the June half.
Big W sources about 20 per cent of products from abroad and 80 per cent locally. It is understood Ms Macdonald is aiming to lift the level of direct sourcing to as much as 50 per cent to better compete with Wesfarmers’ Kmart, which went through a similar transformation five years ago.
Big W insiders believe Big W may also move out of Woolworths’ support centre at Bella Vista in Sydney’s north-west and move to new headquarters closer to the CBD.
However, Ms Macdonald said Big W had no plans to relocate head office from Bella Vista.
Woolworths’ major shareholders, including Perpetual Investments, believe Big W should be sold or demerged to free up capital and enable Woolworths to focus on fixing food and liquor.
Woolworths chairman Gordon Cairns has not ruled out a demerger or asset sales, but wants to rebuild Big W to give Woolworths more options down the track.
Source watoday.com.au: http://www.watoday.com.au/business/retail/big-w-buyers-depart-as-ceo-shakes-up-sourcing-20160523-gp1gvf.html
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