Woolworths South Africa - New Facility Design

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Woolworths previously operated from their City Deep site in Johannesburg.

Over time, and against continually increasing demand for product storage and distribution, the site had undergone extensive alterations to accommodate the growth in the business, to the extent that some parts of the operation were moved and managed ‘off site’.

With the site landlocked, City Deep could not physically support business volume growth.

Project Overview

A new single campus would be required to support the future business to cater to all Woolworths / UPN distribution requirements for all the product ranges, equipment stores / textiles and transport facilities operating from one site, with the development designed to sustain future growth.

Given the importance of the project to Woolworths and the order of capital costs involved, the company took the view that advice should be sought from an independent specialist organisation.

LPC International (LPC) were retained to fulfil this role and consulted during the conceptual planning (and costing) and detailed design stages of the project.

Contents (click to jump to a section):

1. The Brief

LPC’s original brief was to conduct a strategic Distribution Centre (DC) location study to identify the most cost-effective and efficient network to meet the future needs of Woolworths Foods and Textiles operations. The design had to be flexible to meet changing needs in the business and adapt to the potential changes at minimal capital cost outlay.

Technical Approach

The study involved using Computer Modelling techniques (DiPS*) to build and evaluate alternative scenarios and to identify the comparative operational costs and Key Performance Indicators (KPIs) associated with each.

*The distribution centre of gravity analysis was conducted using DiPS, which is a purpose-developed computer model which can be used to examine a wide variety of strategic and tactical questions in distribution and transport operations.

The Scenarios Included:

Building an ‘AS-IS’ Model of the current distribution network to include:

Foods DCs
Textiles DCs
Delivery operations from DCs to stores
Supplier deliveries from production factories or points of import to RSA, into the DCs
Store delivery demands in terms of:
Demand volumes (cases, hanging garments, etc.)
Delivery frequencies
Delivery restrictions, by store, in terms of vehicle sizes and time curfews
Fixed and variable truck offloading times
DC warehouse resources, and all related fixed and variable operational costs
DC transport resources
Inventory costs
Sales order processing and other distribution-related IT/IS costs

The ‘AS IS’ model was validated to ensure that it provided a sufficiently accurate representation of the current network at the time and, where it was necessary, made adjustments to enhance its accuracy.

Using the validated ‘AS IS model’, cost indices and KPIs for benchmarking purposes were generated against alternative scenarios, these being:

The optimum location and size for a single campus development for both Foods and Textiles and to identify the warehousing and transport-related operational costs and resource requirements and being able to provide benchmarks for comparison with the current ‘AS-IS’ model.
The optimum locations for separate Foods and Textiles DCs (one of each) and again identifying the warehousing and transport-related operational costs and resource requirements.

2. The Benefits

The modelling identified opportunities to reduce distribution costs and improve operational efficiency across three core scenarios:

Network Optimisation: Identified the lowest-cost configuration for multi-DC networks, optimising store and volume allocations.
Resource Integration: Balanced the use of existing and new DC resources to minimise transport and warehousing spend.
Fleet Consolidation: Quantified the cost benefits of using a single, common delivery fleet for both Foods and Textiles.

Operational costs and performance KPIs for each scenario were benchmarked directly against the AS IS results.

Based on the modelling, we advised on the ‘Key Decision Drivers’ that influence operational costs and performance as well as the relative importance of each.

The Results of the Scenarios Were Ranked By:

Operational costs
Unit cost, performance
KPIs

Jointly with UPN and Woolworths, two preferred scenarios were selected, and sensitivity testing was conducted on each to determine the potential effects on them of:

Changes in demand or the rate of growth in demand
Potential changes in key cost parameters (e.g. transport, fuel costs, building rental costs, interest rates, etc.)

The distribution centre off-gravity study indicated that the development should be located close to the junction of the N1, N3 and M1, though, as the N1 is busy and sometimes congested, the campus could be located on the N3 at Bedfordview close to the N12. This point was identified as the Midrand / Centurion distribution hub.

3. Feedback From The Client

"The centurion distribution hub offers excellent and flexible road infrastructure to ensure efficient, on-time deliveries to stores now and in the future.

Suppliers delivering to Woolworths distribution centres in Gauteng will drive fewer kilometres to deliver their product. This will also ensure their trucks spend less time on the roads. Gas emissions for both primary and secondary distribution will be reduced.

From a workforce perspective, in the long term, Centurion will ensure easier and more flexible transportation for the workforce due to the Tembisa and Olievenhoutbosch areas being in close proximity."

4. Campus Design

Two sites were shortlisted for consideration, located close to the junction of the N1, N3 and M1.
Concept designs were prepared for the sites together with initial cost plans.

The new store concept designs were generated from revised current volumes at the time, together with projected growth arising from:

New store openings
Introduction of new store formats
Increased sales from existing stores

Capacity modelling indicated that overall sales volumes could more than double based on projected growth trends.

Proposed Distribution Centre Facilities

The proposed Distribution Centre was planned to accommodate the following operational components:

All food disciplines
Meat Plant (subsequently removed from scope)
All textile requirements
Tray wash
Store equipment

Operational Planning and Space Requirements

In preparing the plans, the size of each individual chamber (long life ambient, peri ambient, chill, frozen, etc.) for the Foods operations, plus the Main Offices and ancillary operational offices was calculated.

The concept plans were developed to make best use of the site in terms of site occupancy, site topography (by minimising potential cut and fill requirements), gradients on roadways and parking areas, and including site access and egress arrangements that are likely to be acceptable to the local Council and Highways Authority.

Budget Cost Planning

Budget cost calculations were prepared by Woolworths for the development of the sites. Costs were based on measured quantities on an elemental basis by building area of site and summarised under the main cost headings:

Development Costs

Land
Site clearance and levelling
Substructures
Building superstructures
Mechanical, Electrical and Refrigeration works
External works

Fit-Out and Operational Equipment Costs

Storage systems and equipment
Materials Handling Systems and Equipment
Warehouse Management System (WMS)
Loose equipment
Communications
Trays, roll cages, pallets and other unit load devices
Compactors, balers
Plant and machinery

Site Recommendation

Specific recommendations were provided identifying the preferred site option. The assessment included a detailed comparison of the advantages and disadvantages of each shortlisted site, together with the rationale supporting the preferred selection.

5. Site Selection

The preferred site was Midrand. From a planning perspective, it was chosen for the following reasons:

The size and shape of the site was paramount to facilitate the long-term planning horizon of the distribution centre.
Although the development would initially be circa 80,000m² the site needed to allow for future development to circa 125,000m².
For safety, and with high volumes of traffic, separate ingress and egress points to the site for goods vehicles and cars/buses was required.
To avoid potential congestion on the public highways, goods vehicles entering the site are required to queue on the site. It was important that the site could accommodate a long lead-in to the gatehouse for vehicle processing.
The shape needed to facilitate goods vehicle parking and allow the planning for one-way goods vehicle flows and circulation roads to segregate supplier vehicles and Woolworths vehicles.

6. Development

Before proceeding with the finalised conceptual design, it was essential to conduct a sense check and re-evaluate the design database for the development.

This involved considering both earlier and new data, as well as reconciling the design parameters and assumptions used by Woolworths and LPC in determining the sizing of the chambers and the projected growth rates.

The development of the detailed conceptual design was to include / consider the following:

Warehouse facilities for temperature-controlled foods, stock held and flow-through.
Warehouse facilities for Ambient Foods, stock held and flow-through
Warehouse facilities for textiles and homewares
Retail equipment storage facilities
Warehouse Offices, Employee Amenities, etc.
Tray wash / Equipment Store
Regional Offices, standing alone from the DC development
Gate House
Roadways and hardstandings for commercial traffic and private vehicles
Plant Rooms and other facilities as necessary
QC Facilities
Space for future expansion

Plus potential for the introduction, if and when required:

Meat plant
Vehicle Maintenance Unit
Fuel bunkering and vehicle wash facilities

And, within the design, to plan so that the time-based phases of the development migrate in as flexible and as economic a manner as possible.

7. Performance Specifications

Preparation of logistically based statements of the performance requirements and specifications against the developed conceptual design plans was written following the sign-off of the drawings.

These statements included advising the ‘Design Team’ of all critical dimensional data such as column structural grids, clear spans, heights, etc., floor loadings and flatness, gradients for external yard operations, loading dock arrangements, racking and aisle widths.

Also advising on the layouts of warehouse storage and working areas, all offices and employee amenity areas, the equipment centre, the gatehouse and the plant rooms.

Logistics-based performance specifications were written on the following:

Loading docks
Fire protection systems
Mechanical services
Electrical services and lighting (internal and external)
Refrigeration installation
External works
Ancillary buildings
Security systems, CCTV, and alarm / access control systems
Pallet racking systems

Woolworths have been proactive on all fronts in seeking best practice in all aspects of their business, be it working practices, warehouse planning and warehouse design, building sustainability, or benchmarking their KPIs against similar operations in the UK and Europe.

Great consideration has gone into the premium design of the campus to ‘soften’ the environment of the DC from that of a sterile, purely functional environment, as can often be seen at many other distribution sites.

About Woolworths

Woolworths is a premium South African retailer headquartered in Cape Town, recognised as one of the country's most established names in retail. The brand integrates food, fashion, beauty, and homeware under a single offering, with dedicated departments serving each category across its national store footprint.

Woolworths fashion is known for its carefully curated ranges and timeless elegance. Its food business has built a reputation for exceptional quality, an elevated global pantry, and signature offerings such as:

artisanal breads
irresistible pastries baked fresh
speciality cheeses
an elevated bakery range

Central to the retailer's strategy is the brand's customer-first philosophy, paired with Woolworths' commitment to premium service and purpose-led retail.

This commitment to elevated experiences is reflected in the newly reopened Woolworths Tygervalley store in Cape Town: its next-generation full-line store that's redefining how South Africans shop.

Sustainability is embedded throughout the business: many shop fittings use responsibly sourced timber and locally produced boards, with materials thoughtfully selected for their ability to be repurposed or recycled.

The new Midrand campus is a key part of the infrastructure supporting Woolworths' continued growth across its national store footprint.