Woolworths has admitted it bought baby carriers, including those of Ubuntu Baba, to "draw inspiration" for its own product.
The retailer issued a statement on Friday afternoon, after SA CEO Zyda Rylands had a discussion with founder of Ubuntu Baba Shannon McLaughlin about the retailer's design process.
The spotlight fell on the retailer this week after McLaughlin blogged about how Woolworths had copied her baby carrier product.
Following an initial meeting with McLaughlin on Wednesday, Woolworths issued a statement – indicating that the investigation into allegations of copying was completed and there were "striking similarities" between the products.
As a result Woolworths has withdrawn the product from stores, and customers can return it for a full refund.
In its latest statement Woolworths confirmed that it indeed bought Ubuntu Baba carriers.
"Our suppliers bought a number of baby carriers, including the Ubuntu Baba carrier, from which to get inspiration and create our latest product.
"Our designers also drew on and learned from previous iterations of our own baby carrier that we have been stocking since 2011," the statement read.
The retailer said it will donate its current stock of carriers to under-resourced communities, after removing Woolworths branding.
"There is currently an additional proposal under discussion with Shannon and we look forward to our continued engagement with her," the statement read.
Earlier, McLaughlin told Fin24 by phone that she was not happy with the apology from Woolworths and had since made requests, of which she will know the outcome next week.
"I set down what I would like out of the situation, what I want as an outcome for how Woolworths will do things differently and how to move forward in this situation."
"Hopefully it will not only be positive for Ubuntu Baba, but for Woolworths as well – to show the public they are serious and willing to make some changes," she told Fin24.
Zero-tolerance for copying
Woolworths also circulated an internal memo, leaked to Fin24, about the matter to staff on Thursday.
In the memo, Rylands told staff that the matter is not in line with Woolworths's values and goes against "clear policy and creativity guidelines" in place for its design process.
She said in the memo Woolworths is looking into business interventions and additional training for teams to prevent another incident of product copying.
"I would like to remind everyone that we have a zero tolerance for copying in our business. It is contrary to what we stand for and jeopardises all the hard work our people put into our brand every day," Rylands said.
"Corporate Governance is already planning business interventions and additional training for our teams," the memo read.
Woolworths has previously said it is "deeply committed" to developing local, small businesses.