Woolworths, one of the biggest grocery chains in New Zealand and Australia, has announced that it will be expanding its place in the local gambling market. Since the company decided to work with local hotels a few years ago, grocery profits have seemed less and less significant. So, rather than expanding its retail operations, Woolworths wants to get a bigger portion of the local gambling market share.
A recent report by the Daily Telegraph revealed that profit margins are much higher for gambling. As such, Woolworths earns a 12% profit on every dollar that hotel patrons spend on gambling and alcohol. In comparison, a 4% profit is made on every dollar spent on groceries. This is because the operating costs of running electronic gaming devices is much lower than running an entire retail store, making it much more profitable to expand gambling operations.
Now, Woolworths has decided to obtain a larger portion of Australia’s gambling market share. In order to do so, the company has bought seven new hotels In Sydney – from two of the most well-to-do families in the country. Woolworths will be buying five hotels from the Waughs and two hotels from the de Angelis family. The transaction will cost a total of $60 million.