Woolworths is exploring a closer connection between food, hospitality and fashion retail through a new concept store at Cape Town’s V&A Waterfront, as its food division generates more than R55 billion($3.37 billion) in annual sales.

The retailer has introduced a Woolworths Café alongside The Gift Room, a pop-up retail space that brings gifting and fashion products into the same environment. The concept creates an opportunity to engage customers beyond conventional supermarket transactions by combining dining, coffee and shopping in one location.

The development comes as Woolworths seeks to extend the reach of its food business through additional formats and customer experiences, supported by growing online sales and demand for its products.

A retail concept beyond supermarket shelves

The V&A Waterfront location brings together two different parts of Woolworths’ business. Customers can visit the café while also accessing a dedicated gifting space, creating a retail environment that connects hospitality with fashion and lifestyle products.

The Gift Room uses layered soft fabrics to create an experience resembling the unwrapping of a present. Products are gradually revealed as visitors move through the space, providing a different presentation from conventional retail displays. Mariska van Wyk, Woolworths’ head of Store Design, said the pop-up was developed to establish a softer connection between the hospitality offering and Woolworths Fashion.

The café itself is designed around the V&A harbour, with its architecture and entrance framing the waterfront view. Its colour palette takes inspiration from coffee blossoms and roasted beans, while a centrally positioned barista station makes coffee preparation part of the customer experience. Van Wyk said the intention was to give coffee-making greater visibility and strengthen the connection between customers and the craft behind the product.

Food division generates $3.4 billion

Woolworths’ investment in additional customer experiences comes against a backdrop of growth in its food operations.

The division recorded turnover and concession sales of R55.37 billion($3.37 billion) in the 2026 financial year, an increase of 5.7%. Comparable-store sales grew by 3.7%, while adjusted earnings before interest and tax increased by 3.2% to R3.71 billion($225.6 million).

Its gross profit margin remained at 24.9%, indicating that the sales increase was achieved without a decline in the reported margin. Online distribution is also becoming a more important part of the business.

Sales through Woolies Dash, its on-demand delivery service, increased by 19.6%. Online transactions accounted for 7.3% of Woolworths Food sales in South Africa.

The retailer is pursuing a strategy that combines its established food retail operations with food services, convenience formats, partnerships and digital channels. The new café adds a hospitality component to those efforts.

Consumer spending remains a challenge

Despite the food division’s performance, conditions across the wider group remain challenging. Woolworths Holdings reported total turnover and concession sales of R84.5 billion($5.14 billion), up 4.3%, for the financial year.

Adjusted earnings before interest and tax increased by 2.8% to R5.3 billion($322.24 million).

However, group chief executive Sam Ngumeni acknowledged that the business faced a weaker consumer environment during the second half of the year.

He said the financial performance fell short of what the group expected given its brand strength, asset quality and investment levels.

The V&A Waterfront concept forms part of Woolworths’ effort to develop additional ways of reaching customers while building on its established food and fashion businesses.

Its longer-term significance will depend on how effectively these combined retail and hospitality experiences strengthen customer engagement and support the group’s wider commercial ambitions.