Woolworths reduces cash tills in supermarkets

Following its decision a month ago to stop accepting cash at its WCafe outlets, Woolworths has steadily begun reducing the number of tills that accept cash at its supermarkets. The majority of tills are now designated ‘cashless’, with only specific ones accepting both cash and cards.

Signage to promote “faster checkout” at the “cashless” tills has been installed at Woolworths Food stores.

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Typically, only a quarter to a third of tills at stores now accept cash (and cards). The rest have ‘cards only’ signage. At smaller neighbourhood stores, this means a single till out of three or four that are open will take cash. At larger stores, there are two or three tills accepting cash out of around 10.

Because it operates a single queue system at its stores, this means that customers who want to pay in cash tend to have to wait at the front of the queue for cash-accepting tills to be available. If there are a few shoppers who aren’t using cards in the queue at around the same, this does become a problem.

This has attracted a fair amount of negative comments on social media, especially as the changes were seemingly unclear to some customers who assumed the supermarkets no longer take cash altogether.

(Paradoxically, the implementation of this began the other way round, with Woolies opening ad hoc ‘cards only’ tills during peak times to reduce queue lengths.)

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Based on the number of cash-accepting tills in stores, it appears that cash transactions are likely less than 20% by volume and easily below 10% of value, on average.

The retailer obviously has this detailed information available, and in stores where cash remains a slightly higher form of tender it surely ensures that it has a greater percentage of tills open that accept cash than in stores where cash is less frequently used.

Sure, the cost of processing cash is high, but this change has less to do with this (a store will still accept the same amount of cash, just across fewer tellers) and more to do with managing security within the store. It has a smaller cash float to maintain (at one or two or three tills), and cash-ups only need to be done for these tills.

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Woolies is selling the convenience and speed aspect for customers paying by card, and while this probably has some positive impact, it’s not as if wait times are being halved following this change.

Criticism

The retailer drew sharp criticism from some customers after it stopped accepting cash altogether at its WCafe locations. It justified the change in promotional material by stating that it had “joined a global responsible business initiative that prioritises customer and staff safety”.

Given Checkers’s assault on the affluent end of the market (and, therefore, Woolies), customers have not been afraid to tag the rival retailer in their complaints on social media.

Woolworths reported an 8.4% increase in sales at its Foods unit in the six months to Christmas Eve (7.2% excluding new stores/space), but it did note that underlying product inflation averaged 9.1%.

By comparison, Shoprite said sales at Checkers (and Checkers Hyper) were up by 13.1% in the six months to 31 December. It says internal selling price inflation across the group’s SA operations was 7.7%.

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This means Checkers continues to grow market share.

Ironically, its Sixty60 on-demand delivery service, which has been the engine driving much of this growth ahead of the market, does not accept cash.

This article was republished from Moneyweb. Read the original here