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08-11-2014, 08:45 AM
Woolworths brand fires cheap shots
Sue Mitchell
933 words
8 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
An outbreak of frugality among Australia's 10 million grocery shoppers is testing food and liquor retailers Woolworths and Coles and the creative geniuses behind their marketing campaigns.
In the same week that Woolworths chief executive Grant O'Brien admitted the retailer was struggling to overcome perceptions its prices were too high, Coles boss John Durkan acknowledged the group needed to do more to gain customer trust in its prices.
"Consumers are as value conscious as we've seen them – they're still concerned about the rising cost of living and we're seeing real wages growth in decline," Mr Durkan told analysts on Thursday, after unveiling the biggest shift in Coles's marketing strategy in four years.
Both retailers are now sidelining multimillion-dollar marketing campaigns that have defined their business strategies for many years in favour of short, sharp messages that leave consumers in little doubt that grocery prices are coming down.Cheap Cheap campaign
After delivering its weakest same-store food and liquor sales growth since 2012, Woolworths has launched a new marketing campaign called Cheap Cheap, and slashed the price of staples such as private label bread, carrots and mince meat.
Cheap Cheap is the third iteration of Woolworths' price-based marketing since 2011, when Mr O'Brien first acknowledged that Woolworths had problems with price perceptions.
At that time, Woolworths terminated its nine-year creative advertising relationship with M&C Saatchi in favour of Droga5. It then relaunched its 25-year-old Fresh Food People brand and rolled out a series of campaigns including "More savings every day" and "Extra Special Extra Simple".
Six months ago, Droga5 stepped aside in favour of ad agency Leo Burnett, and Fresh Food People was relaunched yet again in August.
The relaunch helped boost sales of fresh food but did nothing for packaged groceries, leading to the weakest same-store sales growth at Woolworths since 2012 and the creation of Cheap Cheap.
Advertising experts say Woolworths' chopping and changing threatens to confuse consumers and other stakeholders including staff.
"It's never a good idea to change your marketing tactics too frequently or too quickly after a big campaign launch, or if you have a brand positioning that's served you so well for so long,' said McCann Australia chief executive Ben Lilley. "But while consistency is key, so is creativity. There's no point trying to consistently bore customers into visiting your stores."Many consumer options
Mr Lilley said Fresh Food People may no longer be working for Woolworths because shopping habits have changed dramatically and consumers can now buy fresh food from many retailers. "What was right even five years ago for retailers is not right today. People can and do shop in so many different ways now," Mr Lilley said.
"While there's a lot to be said for consistency, there's also a lot to be said for ensuring your strategy is dynamic and relevant for today's market and today's consumer, not for yesteryear."
Woolworths director of supermarkets Tjeerd Jegen defended the continued use of Fresh Food People and the various value campaigns over the last three years.
"Fresh food is at the absolute core of what we do. When you look at us and our competitors we've always had a superior fresh offer for our customers and that's because it has been a key focus of the Woolworths business," Mr Jegen said. "We're known for it and that's why the message resonates with our customers. "
"Probably more than ever [consumers] are looking to keep their grocery prices down," he said. "Cheap Cheap calls out our value proposition. Nobody can mistake what it means to our customers. Prices are cheap and staying cheap at Woolworths."
Woolworths is also relying on pester power to boost sales, resurrecting the wildly popular Aussie Animals trading cards promotion that helped drive same-store food and liquor sales up 3.4 per cent in the December quarter last year, the best rate of growth since 2011.
This time last year, parents were forking out as much as $100 to buy Aussie Animals cards on eBay to fill gaps in their children's collections.
"I don't think anyone expected it to be the success that it was," said Mr Jegen. "Super Animals in some ways will be very similar, with the addition of the sound card reader to add something new."Coles's campaign
However, if Woolworths was hoping Cheap Cheap would be an effective counterpoint to Coles's Down Down campaign, it wasn't anticipating this week's change of tack by Mr Durkan.
Coles has maintained its four-year relationship with agency Big Red. However, in the first major change in its marketing position since 2010, when Down Down was introduced, Coles has moved to an everyday low-prices strategy and a new slogan, Every Day Value.
"Down Down and the big red hand will continue . . . we'll still have a mix of promotions, catalogues and everyday pricing . . . but we certainly are moving more of our pricing to trusted pricing every day," Mr Durkan said.
Citigroup analyst Craig Woolford says Coles's focus on value is not new but the shift in marketing tactics may cause indigestion.
"Weaning off promotions is never painless," Mr Woolford said. "The move towards everyday low pricing is often a struggle unless a retailer can demonstrate noticeably lower prices. Coles's cost of doing business is higher than Woolworths', so it will be hard to sustain lower prices," he said.
Fairfax Media Management Pty Limited
Document AFNR000020141107eab800026
Sue Mitchell
933 words
8 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
An outbreak of frugality among Australia's 10 million grocery shoppers is testing food and liquor retailers Woolworths and Coles and the creative geniuses behind their marketing campaigns.
In the same week that Woolworths chief executive Grant O'Brien admitted the retailer was struggling to overcome perceptions its prices were too high, Coles boss John Durkan acknowledged the group needed to do more to gain customer trust in its prices.
"Consumers are as value conscious as we've seen them – they're still concerned about the rising cost of living and we're seeing real wages growth in decline," Mr Durkan told analysts on Thursday, after unveiling the biggest shift in Coles's marketing strategy in four years.
Both retailers are now sidelining multimillion-dollar marketing campaigns that have defined their business strategies for many years in favour of short, sharp messages that leave consumers in little doubt that grocery prices are coming down.Cheap Cheap campaign
After delivering its weakest same-store food and liquor sales growth since 2012, Woolworths has launched a new marketing campaign called Cheap Cheap, and slashed the price of staples such as private label bread, carrots and mince meat.
Cheap Cheap is the third iteration of Woolworths' price-based marketing since 2011, when Mr O'Brien first acknowledged that Woolworths had problems with price perceptions.
At that time, Woolworths terminated its nine-year creative advertising relationship with M&C Saatchi in favour of Droga5. It then relaunched its 25-year-old Fresh Food People brand and rolled out a series of campaigns including "More savings every day" and "Extra Special Extra Simple".
Six months ago, Droga5 stepped aside in favour of ad agency Leo Burnett, and Fresh Food People was relaunched yet again in August.
The relaunch helped boost sales of fresh food but did nothing for packaged groceries, leading to the weakest same-store sales growth at Woolworths since 2012 and the creation of Cheap Cheap.
Advertising experts say Woolworths' chopping and changing threatens to confuse consumers and other stakeholders including staff.
"It's never a good idea to change your marketing tactics too frequently or too quickly after a big campaign launch, or if you have a brand positioning that's served you so well for so long,' said McCann Australia chief executive Ben Lilley. "But while consistency is key, so is creativity. There's no point trying to consistently bore customers into visiting your stores."Many consumer options
Mr Lilley said Fresh Food People may no longer be working for Woolworths because shopping habits have changed dramatically and consumers can now buy fresh food from many retailers. "What was right even five years ago for retailers is not right today. People can and do shop in so many different ways now," Mr Lilley said.
"While there's a lot to be said for consistency, there's also a lot to be said for ensuring your strategy is dynamic and relevant for today's market and today's consumer, not for yesteryear."
Woolworths director of supermarkets Tjeerd Jegen defended the continued use of Fresh Food People and the various value campaigns over the last three years.
"Fresh food is at the absolute core of what we do. When you look at us and our competitors we've always had a superior fresh offer for our customers and that's because it has been a key focus of the Woolworths business," Mr Jegen said. "We're known for it and that's why the message resonates with our customers. "
"Probably more than ever [consumers] are looking to keep their grocery prices down," he said. "Cheap Cheap calls out our value proposition. Nobody can mistake what it means to our customers. Prices are cheap and staying cheap at Woolworths."
Woolworths is also relying on pester power to boost sales, resurrecting the wildly popular Aussie Animals trading cards promotion that helped drive same-store food and liquor sales up 3.4 per cent in the December quarter last year, the best rate of growth since 2011.
This time last year, parents were forking out as much as $100 to buy Aussie Animals cards on eBay to fill gaps in their children's collections.
"I don't think anyone expected it to be the success that it was," said Mr Jegen. "Super Animals in some ways will be very similar, with the addition of the sound card reader to add something new."Coles's campaign
However, if Woolworths was hoping Cheap Cheap would be an effective counterpoint to Coles's Down Down campaign, it wasn't anticipating this week's change of tack by Mr Durkan.
Coles has maintained its four-year relationship with agency Big Red. However, in the first major change in its marketing position since 2010, when Down Down was introduced, Coles has moved to an everyday low-prices strategy and a new slogan, Every Day Value.
"Down Down and the big red hand will continue . . . we'll still have a mix of promotions, catalogues and everyday pricing . . . but we certainly are moving more of our pricing to trusted pricing every day," Mr Durkan said.
Citigroup analyst Craig Woolford says Coles's focus on value is not new but the shift in marketing tactics may cause indigestion.
"Weaning off promotions is never painless," Mr Woolford said. "The move towards everyday low pricing is often a struggle unless a retailer can demonstrate noticeably lower prices. Coles's cost of doing business is higher than Woolworths', so it will be hard to sustain lower prices," he said.
Fairfax Media Management Pty Limited
Document AFNR000020141107eab800026