Woolworths: A brand under pressure

Friday, 31 July 2015 17:17

Australia's biggest supermarket is struggling. Unrest within the leadership team, with several high profile executives exiting stage left in recent months, and another set of disappointing sales figures are painting a grim picture for the future of this business.

And now, to compound Woolworths’ woes, Coles has just unleashed their latest ad campaign, fronted by Curtis Stone, championing themselves as ‘Coles Fresh’.

So where did it go wrong for Woolworths?

Paul Nelson, BrandMatters’ managing director, was one of a few brand experts interviewed by Mumbrella’s Steve Jones, and gave his insights into why the chain is losing out to competitors such as Coles and European import ALDI.

Nelson’s view is the apparent lack of proactive strategy, and a willingness to copy the competition has created confusion around Woolworth’s offering. Woolworths’ pursuit of value shoppers through the Leo Burnett-created Cheap Cheap campaign was flawed, and was an obvious bid to emulate the successful ‘Down, Down’ campaign created for Coles.

“The market share sensitivity across retailers is omnipresent but it’s easy to exaggerate that and take your eye off the main game”, he said. “That is evidenced by what could be described as a crisis of confidence at Woolworths. They looked at the Coles strategy and thought; ”if they’re doing Down Down, we’ll do Cheap Cheap”.

What could’ve been done?

The better option would have been to capitalise on Woolworths’ existing brand equity surrounding their positioning as the fresh food people – instead Woolworths has seemingly lost confidence, evidenced by an uncertain and unclear brand strategy which has left shoppers equally puzzled.

And whilst it is all too easy to vilify the marketing and advertising teams; the truth is, that without an aligned business strategy with clear key messages, they were, in essence, set up to fail. “If there isn’t a sensible conversation in the boardroom about a longer term strategy, based on key understandings of the market segments, it’s tough,” Nelson said.

Where do they go from here?

Quite how Woolworths will attempt to bolster sales remains to be seen, but there is no doubt that a more rounded approach to strategy is crucial – even if that provides a decrease in market share initially.

“I would build the case for a deeper understanding of the brand assets that reside at Woolworths, that being the fresh food people, and I’d build a deeper understanding of our desired customers – and that isn’t ALDI or Costco customers”, Nelson said.

“Yes, we may initially lose market share but I’d go in with a strategy to bring branded customers into the stores and have deep relationships with my suppliers while simultaneously building out my portfolio with private labels which are delivering deeper revenue.”

When a business attempts to talk to everybody, they end up talking to nobody; and this is evidenced by Woolworths’ current position. By losing sight of what they offer and who their consumer is, they are losing relevance and doing significant damage to their brand equity.

Read the full, Mumbrella article here