Although Woolworths Ltd., Australia's biggest retailer, increased first-quarter revenue 9.6% CEO Michael Luscombe is preparing for a consumer slowdown by accelerating the rollout of his "2010" store format and upgrading loyalty programs to maintain market share gains from second-ranked Wesfarmers.

Woolworths has converted more than a quarter of its 780 supermarkets to the "2010" format, which feature increased selling space for more profitable fresh fruit and vegetables and generate high profit margins. According to Luscombe, "They get improved customer traffic and improved sales. Customers are buying a broader basket and it actually means we get a better margin out of the shopping basket without changing any of the prices."
 
The Sydney-based company's sales rose to A$12.8 billion (€6.3 billion) in the 14 weeks ending October 5 from A$11.7 billion (€5.8 billion) a year earlier. The increase beat the 8.7% estimate of Craig Woolford, an analyst at Citigroup Inc. in Sydney.

Wesfarmers, which owns the Coles chain, last week posted first-quarter Australian supermarket growth of 2.6% with revenue from stores open at least a year rising 1.3%.

(Note: The Australian Woolworths is not related to the London-based Woolworths Group.)

[Click here for an overview of Australia's top food retailers.]