The Woolworths Group Ltd (ASX: WOW) share price is in focus after the supermarket business announced the cost of ongoing strikes.
Woolworths strike update
The supermarket company updated the market about the strikes relating to three distribution centres in Victoria and one in NSW.
The United Workers Union (UWU) started strike action at four sites on 21 November 2024, with the strike now having gone for 12 days.
Woolworths said UWU wants pay increases at those sites of more than 25% over three years, which the ASX share said was “materially above inflation, at a time when Woolworths Group is actively working to keep food and groceries affordable for customers facing ongoing cost-of-living pressures”.
Woolworths also said the UWU is demanding there be “no enforceable performance standard or rate”. The supermarket company business said the use of labour standards to manage productivity is “common practice in supply chains globally end in Australia.”
The UWU says that the framework expects an efficiency rate of 100%, which the workers call unsafe because it can lead to cutting corners, and there is a lot of pressure to do that day after day. The UWU also said:
Workers are not robots and should not be treated like robots. But this is exactly what Woolworths is seeking to do for thousands of workers across their warehouses.
Woolworths said each site is negotiating its own separate enterprise agreement and it has put forward several offers with “competitive pay that is above local market rates, and well above the storage service award”. The latest offer would take hourly rates to approximately 40% above the award.
Offer endorsed
Woolworths noted the Shop, Distributive and Allied Employees’ Association (SDA) also represents a number of team members at these distribution centres and the SDA has recently endorsed a Woolworths offer at one of the affected sites.
UWU continues to picket the site.
What is the cost of this?
Since the start of the industrial action, Australian food sales have been negatively impacted by approximately $50 million to date and a further impacted to sales is expected.
The full cost will depend on the length of the strike and how long it takes to rebuild inventory ahead of the Christmas trading period.
Woolworths said it wants to resolve this as soon as possible. For now, it’s trying to build inventory at stores, leverage its wider distribution network, and get some suppliers to deliver direct to stores. But, stock flow limitations remain.
Final thoughts on the Woolworths share price
Coles Group Ltd (ASX: COL) and perhaps Aldi are benefiting from this situation. I’d imagine Woolworths will want to get this sorted soon because the Christmas period is an important sales period. Woolworths sales were not exactly soaring before this.
I’m not looking to buy Woolworths shares, there are other ASX dividend shares I believe are better choices today.
