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Wesfarmers hones digital strategies

Westfarmers’ online revenues are set to pass the $1 billion mark next year as the conglomerate steps up pressure on its retail and non-retail divisions to hone their digital strategies. Wesfarmers has for the first time asked each of its nine operating divisions to address their individual digital strategies as part of the annual corporate planning process now under way. The digital “deep-dive” is expected to lead to new online platforms, products and services for Coles, Kmart, Target, Bunnings and the industrial and chemicals units, better analysis of customer data and changes to logistics to reduce costs and improve returns, The Australian Financial Review reports. Wesfarmers’ emerging ventures team is also searching for digital acquisitions to augment the group’s online retail presence or deliver intellectual property that could boost digital ­capabilities across the group. Corporate plans will go to the Wesfarmers board early next month and some elements may be unveiled on May 29, when Wesfarmers fronts investors at its annual strategy day. “Every one of our businesses has a lot of active work under way,” said Wesfarmers finance director Terry Bowen, who oversees Wesfarmers’ corporate planning process. “Across the group Wesfarmers already has close to $1 billion in sales online – it’s not like we’re just starting from day one. “In some areas it’s more profitable than others. “If you were to draw broad conclusions it will be around reducing costs, improving communications both internally and externally, growing sales and optimising current infrastructure and improving customer analytic capabilities.” Wesfarmers managing director Richard Goyder has described the digital revolution as one of the biggest challenges and opportunities for Wesfarmers, Australia’s largest private sector employer and second largest retailer. Wesfarmers wants to minimise cannibalisation of sales in its retail and non-retail units from domestic and international online competitors. Morgan Stanley analyst Thomas Kierath says international retailers such as Amazon and Asos are targeting Australian retailers and consumers because Australian prices are higher, local consumers are more prepared to buy online from overseas, the retail profit pool in Australia is large relative to the population and local e-commerce is relatively underdeveloped. Wesfarmers is less exposed to international online competition than Myer, David Jones and specialty retailers because about 35 per cent of sales and earnings come from food and liquor and 25 per cent from resources, insurance, chemicals and energy, and industrial and safety products. Less than 40 per cent of group earnings come from discretionary retail. While Woolworths has pooled its corporate resources to emerge as Australia’s largest multi-channel retailer, Wesfarmers’ decentralised business model means that each division has responsibility for developing its own digital strategy, with mixed results. Last year the group hired Andrew Twaits, co-founder and former chief executive of online betting agency Betfair Australasia, to review its digital strategy, including online retail, digital marketing and social media, and provide ongoing advice to several divisions. Mr Bowen said while there was scope for Wesfarmers to play a bigger role in harnessing digital capabilities across the group, digital strategy would always be driven by each business unit. “We then very much try to ensure that accountability and responsibility for delivering our digital strategies is done by the divisional leadership team,” Mr Bowen said. “Wesfarmers acts as an overseer of those strategies to ensure we robustly challenge and test them and make sure they’re on track.” “It’s typical of the Wesfarmers way – ensuring that we get deep levels of responsibility and accountability at a divisional level to deliver the best outcomes in the individual businesses is our primary focus,” he said. “We have to make sure that Coles has the best offer in that space and Bunnings has the best offer in that space. To the extent that there’s synergistic plays across the group, time will tell.” “The Land” http://www.theland.com.au/news/agriculture/agribusiness/general-news/wesfarmers-hones-digital-strategies/2655613.aspx?storypage=0

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