To begin with, I’d like to ask you all to please keep your mobile phones switched on. I certainly don’t want you to be missing any shopping opportunities while you’re here at lunch. There are some particularly good online specials at BIG W today which you might want to take a look at! Good afternoon. It’s a pleasure to be here with you today and to be talking about such an exciting topic. I’ve pretty much spent my life in retail and little did I know when I first started at Grace Bros on the shop floor, more years ago than I’d care to mention, I’d one day be talking to a room full of people about virtual shopping walls, interactive virtual changing rooms, hologram fashion shows and essentially giving Australians the ultimate freedom to shop when they want, how they want. Over the years, trends and innovations have come and gone in retail, but I have to say, I’ve never seen so much change and potential change as I do right at this moment thanks to the connective power of the web. It is fundamentally shifting the power entirely towards the customer – they now have the ability to shop whenever and wherever they like, and from any retailer in the world. And not just from any traditional retailer either. Anyone can now be a retailer – stay at home mums from their spare bedroom, enterprising teenagers from their college dorm or collectives of like‐minded sellers aggregating their marketing opportunities. The great democratizing effect of online commerce is stretching right across retailing. Now more than ever before, customers are driving retailers towards change and you are either keeping up or you’re not. If you are not fully in tune with what your customers want and need you to deliver now and in the future then you are placing your business at considerable risk. I am always incredulous when I hear a retailer say online is limited in its category reach or that they will lose business because customers won’t impulse buy, or it will jeopardize jobs. Even worse is the recent news that Australian retailers are doing deals with global brands not to ship to Australia at a lower cost. What kind of message does this send to your customers? In my view, it simply tells them you’re anti‐competitive and to go elsewhere. At Woolworths, we don’t want our customers to look elsewhere, so we’ll continue to give them what they want. We have strong, market leading and highly trusted brands that are already succeeding just as well online as they do offline as long as you have a consistent brand experience across physical and virtual stores. Every single one of our major trading businesses now has, or is about to have, a comprehensive transactional offer. In the last year alone we’ve launched Dan Murphy’s online – selling not just a huge range of everyday reds and whites, but also bottles of whiskey worth ten thousand dollars. We launched the most downloaded supermarket app, now with more than a million and a half users and then enhanced this by adding connectivity to grocery shopping via mobile and via Australia’s first virtual shopping wall for groceries – a version of which is right behind me We also launched click and collect options to pick up your shopping from refrigerated vans on major transport routes. We created a BIG W app allowing you to compare prices to competitors via bar code scanning – a feature that will shortly extend to more than 60,000 products, clearly demonstrating how much confidence we have in our low price promise. We launched a deals site called Doorbuster and we’re now just a few weeks away from launching Australia’s first home improvement transactional website for Masters – turning a new business with just ten physical stores into a national chain overnight. But that’s just the beginning. But it’s not just about how you take your stores online, multi‐option retailing is also about how you bring technology into your stores and integrate the two. Our stores of the future will be very similar to now but equally, very different, depending on how you choose to use them. Customers will have full accessibility from the moment they park their car, with their smart phone reminding them of specials they might like or products they might be running out of. Once in the supermarket, their own shopping list, which they can print out when they walk in, guides them around the store aisle by aisle and they use their phone to scan as they go, using a digital wallet to simply tap and go at the checkout. RFID technology promises a future where no scanning is required at all – microchipped ink on barcodes simply talks directly to your Everyday Rewards account. This future is right around the corner, coming to a supermarket near you sooner than you think. The role of the store, particularly for groceries, is extremely important, which is why our multi‐option strategies are highly store‐focused. Food is tactile and subjective in terms of quality – for example – preferred ripeness of fruit and vegetables. What’s required is a truly multi‐option experience where a customer’s trust and confidence in the brand enables them to trust the retailer to choose for them. The options for general merchandise are also endless but multi‐option is moving at a much faster pace in many GM categories. Just a few short years ago, a little bookstore chain called Borders arrived in Australia with great fanfare and promises to shake up the local market. Now it’s just a footnote in history and a victim to the rapid pace of digitalization of the book category. Apparel in particular is subject to some highly creative solution. Virtual changing rooms that allow you to compare the fit of a garment to your exact measurements to see how it would suit you, virtual catwalk shows using hologram models that let you scan the clothes as you see them and order them there and then. History of course, is full of great technology searching for a business case and our job as a retailer is to marry up the novelty to a service that adds genuine meaning and value to the purchasing journey. Essentially, the same fundamental expectations of retailing will always hold true for customers – they want value, choice, quality and convenience. But the concept of each of these is shifting. Convenience doesn’t mean a store at the end of your road anymore – it means a store at your fingertips. Value doesn’t mean the cheapest in your local mall, it means the cheapest on the planet. Choice doesn’t just mean the things you can see in front of you at a particular moment in time, it means all the options that are possible. And quality is about the service as well as the product ‐ the whole package from the moment you browse to the moment you receive your goods. Or even beyond – the moment you need to return something quickly and easily or the moment you share your experience with your friends, their friends, and everybody’s friends. That’s the new measure of quality. It’s traditional shopping drivers, but amplified to a whole new level. So how does a retailer like Woolworths, whose core business is more than 3,000 bricks and mortar stores, become a credible force in this new retailing future? Well it really starts with attitude. Woolworths has a very enlightened approach to what we define as multi‐option retailing. It’s viewed as an opportunity, never as a threat and we completely understand how it needs to integrate with our store network to provide customers with a seamless journey from knowledge accrual all the way through to transaction and delivery, allowing them to switch easily between virtual and physical without any dilution of experience. Your attitude to online is entirely shaped by your attitude to your customers – if your retail model is about serving them better, then you’re likely to be an internet advocate. However, if your retail model is based on taking advantage of them, then you’re probably at the opposite end of the innovation spectrum. From attitude, you add talent ‐ blending the best mix of traditional retail experience with cutting edge innovation and vision. Then you cement that with your existing competencies – in our case, a highly regarded supply chain infrastructure. Technology is almost the final step – the natural extension. But to follow technology slavishly because it’s new and shiny, without the right attitude, talent and competencies, is a recipe for disaster. The other recipe for disaster is to not give sufficient thought to your logistics and fulfillment. Fulfillment is the non‐sexy but absolutely critical driver of online retail success. That’s why in my role, I have duel responsibility within Woolworths for multi‐option and supply chain. Unless you have the back end working efficiently, you won’t satisfy your customers and won’t actually make any money – which is sort of the aim of the exercise! For a traditional retailer, this may well mean adapting your existing logistics structure to better accommodate the different demands of single item deliveries. Existing fleets of semi trailers and b‐doubles are ill‐equipped to deliver to single households in residential suburbs so we need to find a way to integrate a more flexible solution. Equally, distribution centres are designed to move massive volumes of stock in full pallets, full cases in full truck loads direct to stores. The job at hand is to leverage that existing supply chain infrastructure and build on capacity to take a delivery the extra 5 kilometres direct to a customer’s home. This probably means layering on some smaller, cost effective fulfillment centres handling smaller quantities of stock for single deliveries. Partnering with good third party operators is an interim solution but more thought needs to be given to the longer term efficiencies of this. And of course, your logistics structure needs to accommodate returns as well as deliveries – again, a very different mindset from what we’re used to. It hasn’t all been plain sailing for online retail so far. We’ve made mistakes along the way, as have many other retailers. Amazon for example, tried many different business models before settling one its current marketplace concept and is now finally delivery returns. One critical issue multi‐option retailers are grappling with is the challenge of fulfilling customer’s needs against a critical date. This last Christmas was a good example of that. It was easily the biggest online Christmas event ever, but with so many people this year turning to online to do their shopping the weakest links in the chain became very obvious. For our BIG W business, fulfilling a record number of online toy laybys and delivering these by the right date for santa created some major issues. For us it highlighted how critical well planned execution internally of receipt and dispatch of goods really is; it highlighted the very high level of trust we placed in the 3 party logistics providers… the people we rely on to get the goods to the customer’s door. Going forward BIG W will now have the benefit of a dedicated distribution stream for online, a world class tracking system for customers and staff, and the right systems that will make sure santa’s delivery is wrapped and dispatched with plenty of notice. Aside from the occasional steep learning curve, we are very confident that our future is an incredibly exciting one as multi‐option opens up entire new growth avenues for us to pursue at relatively low cost. With our global buying networks and world class supply chain, the foundation blocks are already in place for us to capitalize on a myriad of opportunities. And despite some hysteria from some parts of the retail sector, we are also confident in the future job security our employees as we move towards this changing landscape. We know we will always be an employer of hundreds of thousands of people, regardless of the shape of our retailing model. The jobs of the future may look at little different but retail and fulfillment will always be a labour intensive industry. For Australia as a whole, the impact will resonate both subtly and obviously. For example, a very simple outcome will be an explosion in the number of small delivery vans right across our cities and towns, delivering to homes, offices and collection points. Forward looking urban planners should be thinking about how they can incorporate a click and collect future into their developments. Residential and commercial buildings likewise need to accommodate a major uplift in small and large parcel deliveries with the provision of secure facilities. Without doubt, we are on the cusp of major transformational change in retailing, the likes of which I don’t think we’ve really seen before, and its impact will be felt across our communities. My role is to enable Woolworths to be the leading architect of this change in this country and to adapt to a new environment where the customer uses technology to drive the decisions. Multi‐option is a pivotal growth platform for our business but to truly capitalize on the opportunity you have to get your arms right around it and remold your business structure to accommodate not just the change in practice, but the change in attitude. I’m often asked, “Why is it so important to us?” Well, very simply, it’s important to our customers and it stands to reason that what’s important to them needs to be game changing for us. Thank you.