Woolworths Eyes Standalone Beauty Stores as Growth Accelerates

The Woolworths Group is betting big on beauty as it plans to double the size of its beauty division over the next three to four years. CEO Roy Bagattini revealed this ambitious target following a period of 20% annual growth in the sector, signaling a strong consumer appetite for beauty products.

Standalone Stores and New Offerings

Woolworths is experimenting with standalone beauty stores to cement its position in the market. Its first store, launched at Waterstone Village in Cape Town, has set the stage for further expansion. Additionally, the company has opened a manufacturing plant in Cape Town dedicated to its W Beauty product line.

The group’s beauty portfolio comprises 30% W Beauty products and 70% established brands, a ratio that Bagattini is content with for now. The balance ensures Woolworths remains a go-to destination for beauty products while building profitability through its own brands.

Plans are also underway to introduce nail and skin treatments, enhancing the in-store experience and driving more foot traffic.

Fashion Dominates, but Beauty Gains Momentum

While fashion still accounts for 85% of Woolworths’ Fashion, Beauty, and Home (FBH) revenue, the beauty segment is emerging as a critical growth driver. The company’s latest trading update for the 18 weeks ending 3 November 2024 showed a 3.5% increase in turnover for the FBH segment.

Food Business Remains the Core Engine

Despite the beauty division’s rapid growth, Woolworths’ food business remains its primary revenue generator. The November 2024 trading update reported a 12.1% increase in food turnover, with online sales surging by 36.9% thanks to the success of Woolies Dash, which grew sales by 54.4%.

Excluding acquisitions, food sales jumped by 9.6%, reaffirming Woolworths’ strong brand positioning among South African consumers.

Challenges in International Markets

The group’s Australian and New Zealand operations faced headwinds, with Country Road Group (CRG) sales declining by 8.8%. The tough retail environment in these regions—characterized by declining foot traffic and intense competition—has forced Woolworths to focus on repositioning brands like Witchery and Trenery.

Woolworths is poised for significant growth in its beauty division, leveraging standalone stores, innovative product offerings, and a strong brand to capture more market share. While its food division continues to dominate, the company’s diversified strategy across fashion, beauty, and international markets aims to navigate economic challenges and deliver sustainable growth.

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