It is Woolies.
Huh. Now that you mention it, the checkout lady at my local Woolworths did seem pretty chatty the other day. I didn't think anything of it, other than to be a bit annoyed at being 'forced' into chit chatting with a stranger when all I wanted to do was get through my transaction as quickly and painlessly as possible.
I hate all this fake and enforced interaction type stuff with complete strangers, especially when I'm trying to do something as annoying as the weekly shopping. The arm grabbing though is definitely way out line, and whilst I may let it slide once, if it happened again, I'd complain to management. If it's their new policy, they need to be told how wrong it is, and if it's just the cashier's own thing, s/he needs to be made aware that that is definitely not okay.
I'll take notice now to see if this Q&A type thing becomes a bit of trend, and if so, I'll start going across the road to their competitor, Coles!