Could Woolies be launching new concept stores with street food called “Woolworths Food Quarter”?

Woolworths is staying tight-lipped on a mysterious ready-to-eat food retail offering after plans for the innovative retail concept known as the “Food Quarter” emerged as part of a legal dispute over retail tenancies.

On Friday the Wentworth Courier reported that Woolies had won a case in the Supreme Court of New South Wales to prevent grocer About Life, which had a store adjacent to a Woolworths store in Sydney’s Double Bay, from transferring a retail lease to larger fresh food competitor Harris Farm.

Woolworths successfully argued its leasing arrangements entitled it to first right of refusal of the store space.

However, details in the court judgment reveal an element of Woolworths’ strategy that has not gotten any airtime: the idea the supermarket might want to use the space to establish a “Woolworths Food Quarter” concept store.

Giving evidence in the case, general manager of property at Woolworths, Matthew Franich, said the supermarket would value the opportunity to set up a store that would “predominantly provide ready-to-eat meals in a similar fashion to About Life, expansion of Woolworths’ e-commerce operation through “Click & Collect”, or a Dan Murphy’s cellar business, of the kind operated by Woolworths from its store in Prahran, Victoria”.

Woolworths has been focused on the idea of more compact, specialty retail spaces, rolling out its Woolworths Metro format targeting nine-to-five workers over the past couple of years.

However, there’s been no formal announcement of a space combining click-and-collect with higher end liquor and fresh food.

When asked for more details this morning by SmartCompany, Woolworths said there was “nothing further to add at this stage”.

The Daily Telegraph refers to previous reports of a trial of the scheme, however, with retail consultant Delwyn Oliver writing on LinkedIn as early as April last year that a “street food” centric Food Quarter format was being tried at Woolworths’ headquarters.

Higher end fresh food remains untapped

When Woolworths reported its full year financial results last week, overall sales of Australian food were up 4.5% to $36.4 billion.

Reflecting on the results, Euromonitor International research analyst Hianyang Chan said a cheaper same-day delivery service for groceries was no doubt an important part of the supermarket’s strategy, but in-store convenience is also a priority.

“It is expected that the parent company will aim to further strategise on how to better retain and expand their consumer base by better omni-channel offering, wider, better priced and a more localised product range,” Chan said last week.

Gary Mortimer, a retail expert and associate professor at Queensland University of Technology, agrees there’s still space for Woolworths to diversify its in-store formats.

“For a while now, the top end of the food market has grown almost silently, and people almost haven’t seen it,” Mortimer says. 

The supermarkets have their eyes on how to capture gourmet-style offerings that will slot into their pre-existing shopfronts and logistics operations, he says.

A convenient, higher-end ready-to-go food offering would fit with customers in affluent areas like Melbourne’s Fitzroy or Sydney’s Mossman, he says.

Any plans along these lines will be looking to take the challenge to fast food retailers.

“We’re seeing supermarkets start to see food is not necessarily ‘buy, take home and consume’, there’s a real growth of fast-casual,” Mortimer says. 

Woolworths might be quiet on the future of its Food Quarter idea, but its recent annual report includes a focus on growing both the click-and-collect offering and more highly curated liquor spaces.

Sales of the company’s drinks business came in at $7.91 billion last financial year, with one-hour click-and-collect rolled out for the first time at all of the company’s BWS stores.

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