Woolworths strike: Distribution centre action has so far cost grocery giant $50m in lost food sales

Strike action by Woolworths warehouse workers that has left shelves across Victoria bare has so far cost the grocery giant $50 million, with no end in sight to the stand-off over a new pay deal.

The significant loss in just 12 days has now forced it to lodge an application with the Fair Work Commission to stop striking workers from blocking access to three distribution centres in Victoria and one in NSW.

More than 1500 United Workers Union members across the sites walked off the job indefinitely on November 21 after protracted negotiation for an new enterprise bargaining agreement ended in a stalemate.

Union members argued that while the grocer’s profits continued to increase, wages had stagnated, contributing to the “growing wealth inequality” across the country. They are demanding annual pay increases of between 10 and 12.5 per cent.

The action has left shelves in some stores empty in the all-important lead-up to Christmas.

In an update on Tuesday, Woolworths said it has been engaging in “good faith” with the union for more than four months but said the pay demand was “materially above inflation, at a time when Woolworths is actively working to keep food and groceries affordable for customers facing ongoing cost-of-living pressures”.

“The UWU is also demanding there be ‘no enforceable performance standard or rate’ which would preclude Woolworths’ ability to manage productivity,” it said.

“The use of labour standards to manage productivity is common practice in supply chains globally and in Australia.

“While each site is negotiating its own separate enterprise agreement, Woolworths has put forward several offers with competitive pay that is above local market rates, and well above the Storage Services Award.

“The latest offers would take hourly rates at these sites to approximately 40 per cent above the award.”

Woolworths said it had also been locked in pay talks with workers at the Melbourne South Regional site represented by the Shop, Distributive and Allied Employees’ Association, which had recently endorsed an offer.

But it said a plan to re-open the centre and for the workers’ to return to work on Monday was blocked by picketing from the UWU, which was “refusing to give any assurance of safe passage for those team members who wish to work”.

It said that had prompted the application to the workplace umpire.

Woolworths said the disruption to had already cost it about $50m in lost sales food sales up until Monday. Given the time needed to resupply if and when a deal is done, it warned investors the full financial impact could not yet be known.

Woolworths in August announced a $1.7 billion profit and a special dividend of 40¢ a share for shareholders.

The bare shelves are reminiscent of the early day of the COVID-19 pandemic when shoppers stripped them of everyday essentials.

The industrial action is limiting the availability of items such as nappies, toilet paper and drinks. No product limits are in place apart from eggs, which have been rationed for months following bird flu outbreaks in NSW and Victoria.

Woolworths said it had built inventory at stores, leveraged the wider distribution network and some suppliers had delivered direct to stores.

“However, due to the extended disruption, some Woolworths supermarkets in Victoria, ACT and NSW are experiencing stock flow limitations on some lines, impacting product availability of ambient, chilled and freezer lines for customers,” it said.

Picketers have said they will continue their around-the-clock presence at Woolworths warehouses and will be there until a pay agreement is reached.

Talks with the UWU resumed on Monday

National secretary Tim Kennedy said despite “aggressive US-style industrial relations tactics” it seemed that after 12 days of negotiations Woolworths was showing signs of understanding their workers’ claims.

“Today’s negotiations show Woolworths the way they should be resolving this issue, by talking with and listening to their workers,” Mr Kennedy said.

“There’s no doubt we’ve made some progress today ... we think there is an agreement to be made if Woolworths steps forward to fix it.”

A unionist on the picket line said the industrial action would “intensify” unless their demands were met.