Woolworths: Where did it go wrong?
Australia’s biggest supermarket is struggling. Steve Jones spoke to industry experts about how Woolworths’ marketing strategy has faltered, and whether the brand can revive its fortunes.
When Woolworths chief executive Grant O’Brien fell on his sword last month after another disappointing set of quarterly figures, it surprised no one.
Without a chief marketer following the abrupt departure of Tony Phillips – and with several other high profile executives exiting stage left in recent months – it was just another in a long line of senior level departures at the embattled supermarket.
According to industry observers the management upheaval is symptomatic of a business which has not only lost its way but one that is unable to find a solution to its decline in sales.
To add insult to injury, Woolworths is facing a threat to its market leading position in a sub-sector it has dominated for decades – fresh food.
As one brand consultant told Mumbrella:
It’s felt a bit like watching a boxing match. Woolworths clinging on without much of an idea how to fight back. And then it gets brutally clubbed to the canvas while already on its knees. It’s enough to make you want to look away.”
As sporting analogies go – and they are often used to describe the successes, or struggles in the commercial world – it is one few disagree with.
Already struggling to combat the rising threat of ALDI, bogged down by its ailing Masters division and consistently outperformed by Coles, the latter appeared to kick sand in its face by launching a blatant, and brazen play for the fresh food battleground Woolworths once ruled.
But while commentators believe the Coles Fresh campaign, produced by Ted Horton’s Big Red agency and fronted by Curtis Stone, clearly needs a response from Woolworths – and quickly – it is only one of several issues the supermarket needs to confront.
Opinion of where Woolworths has gone wrong is wide and varied, but a common thread is that it has lacked leadership, become reactionary and fundamentally appears unsure of what its strategy should be in the face of rising competition.
‘Cheap Cheap’
According to BrandMatters managing director Paul Nelson, Woolworths’ pursuit of value shoppers through the Leo Burnett-created Cheap Cheap campaign was flawed, despite conceding economic pressures have made shoppers increasingly price conscious.
“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’. That was flawed in our view.
“I think they have lost sight of the power that resides in the Woolworths brand and the work they have done previously with fresh food people. They need to talk about price but in a way that aligns back to the brand.
“They are reacting rather than acting proactively.”
Nelson suggested Woolworths should have stayed “true to its knitting” by building a proposition around fresh food “and how that is a benefit in the context of a tighter economic environment”.
“Instead they have charged forward thinking everyone is after the lowest price. Are they really?,” he said.
Pip Stocks, founder of brand research agency BrandHook, said Woolworths, has “lost its way”, partially a result of ALDI’s rapid growth.
Stocks agreed with Nelson’s assertion that Woolworths has seemingly lost confidence, evidence by an “uncertain and unclear” strategy which, she argued, has left shoppers equally puzzled.
“The strategy is not clear and consumers are not clear why they should be shopping at Woolworths,” she explained.
“ALDI has taken everyone by surprise; retailers didn’t expect them to do as well as they have. In addition to value shoppers, ALDI has also attracted a medium to affluent customer base and that in particular has taken Woolworths and Coles by surprise.”
Stocks said consumer confusion is based around Woolworths historical proposition as a “heritage brand offering quality” but one that is now pursuing a price-driven message in competition with Down Down.
It has now fallen between two stools, Stocks said, “and is neither one thing nor the other”, while ALDI has crystal clear strategy that is disrupting the status quo.
“In the grocery sector you need to be interesting or cheap. Woolies felt interesting but now they are trying to compete on price. It just feels like a no win strategy,” she said. “It doesn’t feel well thought through. You’ve only got to look at sales to know that it’s not working.”
Sales struggle
Looking at those sales figures of recent quarters referred to by Stocks, it is, indeed, hard to conclude that Cheap Cheap has been anything other than an abject failure.
In the third quarter of the last financial year Woolworths increased food and liquor sales by just 0.2 per cent, and a June market update pointed to the fourth quarter also being slow, down 0.7 per cent.
The removal of Tony Phillips, a decision that deeply wounded the former Coles marketer according to insiders, adds considerable weight to that assumption. Indeed, at its half year results earlier this year, Woolworths admitted its promotional programs “were not as successful as we expected”.
“While our ‘Cheap Cheap’ campaign has been well received by customers….we did not see the improvement in price perception we anticipated during the quarter,” the company said.
In short, it failed, and even if the writing was not quite on the wall for Phillips, the lid was coming off the pen.
Stocks suggested Woolworths became “scared” of the ALDI and Costco threat and their ability to take market share, but said the transition to “cheap” was unnecessary.
“Cheap is a valid strategy but it needs to be wrapped up in who you are as a brand. With ALDI it’s their positioning and one they have held strong to and delivered on. You have to live and breathe it. But that was never Woolworths’ positioning. It isn’t who they are and it isn’t what customers expect them to be.”
Sources with inside knowledge of the business were critical of Woolworths leadership in the boardroom – or absence of it – describing O’Brien as a decent man but one who was “old school” and “lacking inspiration”.
“Woolworths has been lacking a visionary leader, that has been a key issue for the business,” one source told Mumbrella, adding, crucially, that while the Cheap Cheap push gained early momentum, it stalled in part because of one fundamental problem – it wasn’t based on a customer reality.
“There was some early effect but ultimately the message had to be real and it wasn’t. If a customer spends $250 and after Cheap Cheap they look at their receipt and it still says $250, you have a problem.
“It’s no good cutting half a dozen products. If you do a price comparison Woolworths is still the most expensive and you know you can save a fortune by shopping at ALDI.”
To that end, Phillips, and Leo Burnett which won the Woolworths creative account early last year, were on a hiding to nothing.
‘Down Down’
Management was said to have become “starry eyed” with Phillips, such had been the success of Down Down and the highly successful One Direction campaign. But the adulation didn’t last long.
“Internally the board had spoken about Down Down and the One Direction campaign, which has been very successful, and they regarded Tony as the saviour,” one source said. “But to follow Down Down exactly down the same path was never going to work. You only get to have that success once with effectively the same campaign.”
Some within Woolworths also viewed Phillips as a good advertiser, rather than a marketing all-rounder .
“That said, the expectation at a very senior level was very high and I don’t know if any marketing director could have turned it around, not without the company’s help. They were too concerned with today’s sale with very little regard for brand equity. That is built over time and it doesn’t translate into sales in a week.”
But to blame marketing would simply be to shoot the messenger, according to Richard Curtis, chief executive of FutureBrand who said he was unconvinced Woolworths had the right ‘product’ for the market.
“Their promotional activity always seemed complicated and at times confusing, and there’s only so much ‘marketing’ can do to hit the mark if there isn’t the clarity and substance to support it,” he said. “In the meantime, Coles were very direct and disciplined, and Woolworths paid the price.”
Curtis also suggested Woolworths has been “caught out” by a “nostalgic sense of their brand equity”.
“They seemed to focus on re-creating their past successes rather than keeping pace with the changing dynamics of the marketplace,” he said. “Unfortunately, Woolworths have become uncompetitive in branding terms, caught in the middle without a clear sense of purpose.”
To compound its problems, Curtis predicted Woolworths will not only have Coles and ALDI to contend with in the budget battleground, but David Jones at the premium end, a reference to speculation that Woolworths Holdings, the South African owner of DJs, has appointed a general manager of foods to overhaul its food business.
Observers largely exonerated Leo Burnett’s of any blame, arguing they would have been presented with a fait accomplis by Phillips with very little room for manoeuvre.
“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. “Marketing’s response to a demand for short term results is to go to their agency and say ‘guys, if you don’t deliver me something that the board will buy, I’ll get fired and guess what? You’ll follow me out of the door 30 seconds later’.
“The agency just doesn’t get the chance to say to the marketing director ‘mate, stop, let’s go back to marketing-first principles, let’s understand what our brand is and what it stands for’.
“The strategy requirements makes it really hard for agencies to push back.”
Business models
He added that while Coles has consistently and successfully made a virtue of brand ambassador Curtis Stone, Woolworth seems to have underutilised its affiliation with British cook Jamie Oliver, despite fronting TVC promoting winter savings.
“Woolies has Jamie Oliver in its portfolio, and he seems like a good fit, but I’ll go back to that crisis of confidence in that they have said, ‘yes, we have Jamie but find me something that competes with Down Down and someone has walked in and said ‘we’ve got it, it’s Cheap Cheap.”
It is felt by some within the organisation that the root of the price issue has been an overwhelming desire of local supermarkets, Woolworths in particular, to cling to margins generally considered to be highest in the world in the sector.
But such margins are no longer sustainable in a competitive environment where international brands are bringing scale – and low prices – to Australian shores.
According to insiders, the board have brought the current predicament on themselves by failing to recognise the inevitable reality that such margins were unsustainable.
“Woolworths has a very old school style of management. The fact Woolworths has had a poor price perception has been well known internally yet they have been clinging on. It is one of the most profitable supermarkets in the world and that’s great for shareholders who have loved the returns. But the world has moved on. The margins they are enjoying are just not sustainable.”
There is certainly a view in the market that Woolworths has failed to sufficiently invest in store refurbishments with sources telling Mumbrella that 70 per cent of Coles stores have been upgraded over the past 10 years, compared to only a quarter of Woolworths locations.
Add to that the rapid decline in loyalty for both major supermarket chains – with estimates that as few as seven per cent of us are truly loyal to Coles or Woolies – it is little wonder that shoppers have drifted away.
Marketing consultant Andrew Woodward agreed that loyalty has all-but vanished, and replaced to some degree by a cynicism among consumers who believe the big brands have squeezed suppliers in a bid to keep their own margins intact.
In addition, supermarkets have essentially become commodotised, he said, with Woolworths losing its “guiding light” of fresh food.
“For years Woolworths had etched into the minds of consumers that they were the fresh food people. The problem now is that everyone makes a virtue of fresh food. We are seeing the rise of farmer’s markets and the like and that has taken the competitive advantage away from Woolworths.
“Also, the Coles near where I live is turning into a gourmet restaurant, so that is Woolworths’ major competitor showing they make fresh food on the spot. Fresh food is where Woolworths won for so many years but they just don’t have that positioning anymore.”
Another brand and marketing expert with close ties to Woolworths told Mumbrella the board has been neither “impressive nor decisive” and has been too focused on feeding the profit-hungry mouths of shareholders and investors.
The “short term fix” to its problems of a price-driven marketing message was also incorrectly executed by a board who pinned their hopes on the Coles marketer who brought Down Down to the world.
“The board thought the man was the answer to the problems, but an individual is not the answer. A strategy is the answer and cost cutting is not a strategy.
“All the board did was nick someone from the other team who knows only one way of playing the game. Tony Phillips was just prescribed what the board thought needed to be done. He came in and replicated what he had done at Coles by cutting the guts out of the price. And there is a general feeling such a campaign would only work once.
“The market was persuaded it’s all about price. It’s not.
It wasn’t action, it was a reaction.”
Another marketing expert with knowledge of the business was adamant the supermarket should wrestle back control of fresh food, and do it quickly. Failure to do so would be “bordering on negligent”.
“If they let Coles grab fresh food from them it will be an absolute disaster. If they don’t defend the turf which they have held for 30 years what on earth is going to distinguish them in the supermarket wars?
“Of course everyone is into fresh whether it be Coles, Woolies or Harris Farm, but fresh isn’t the thing. It’s the ownership of it, and protection of it that is key.
“Woolworth in theory has the high ground but if they don’t defend it with determination then it won’t have been taken, they would have given it away.
“At the very least they should be pulling stuff out of the archives and blitzing it, saying ‘we are the fresh food people, you are the pretenders’”.
Asked about new competition in the fresh food battleground, a Woolworths spokesman said: “We are not recent converts to offering our customers great quality fresh food. Australian’s have known Woolworths as the fresh food people for more than 30 years.
“Our produce is 96 per cent Australian grown, fresh and fantastic quality. Just last year we relaunched the Fresh Food People jingle Australians know and love and gave it a contemporary feel.
“Woolworths will continue to call out to our customers in our marketing the things that have always been our strengths; fresh food, great service, a fantastic range all at a great price.”
In its recent market update the supermarket flagged it had been focussing on a three-year growth initiative and improved customer offering with a “focus on improving the supermarket customer experience through improved service, refurbishments and innovative offers”.
Wider issues
Aside from marketing, former executives believe in-store issues need addressing, such as improvements to Woolworths own-label packaging and an overhaul of the loyalty scheme, while the time and resource spent propping up its troubled Masters brand is thought to been a major distraction.
Indeed, the Australian Financial Review reported earlier this month that analysts and investors believe Woolworths pushed up supermarket margins to record levels to fund its ill-fated home improvement strategy.
“Masters has actually done ok in some states but in New South Wales it has struggled and sucked money and attention at a board level,” one executive said.
Quite how Woolworths stems its sales decline is open to considerable debate, but Nelson stressed a more rounded approach to strategy was critical. And if that meant taking a hit to market share, so be it.
“I would build the case for a deeper understanding of the brand assets that reside at Woolworths, that being fresh food people, and I’d build a deeper understanding of our desired customers – and that isn’t ALDI or Costco customers,” he 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.”
Stocks, meanwhile, said Woolworths should re-establish its emtional connection with customers by “going back to the beginning”.
“Look at why it all started. There will be some amazing nuggets about the how and why,” she said.
“If you go back to that heritage you can build on something that is authentic and that is what consumers believe.
“They don’t believe stuff that you just come up with. They believe brands that have authenticity and in Woolworths will have stories in their history that they can communicate and build a customer experience around.”
- Steve Jones is chief reporter for Mumbrella
2 Things: customers won’t believe the Fresh Food tag when most of their food isn’t. Seen Whole Foods in the U.S.? Fresh.
Secondly, WOW marketing will never succeed if their marketeers are constantly usurped like skittles from Snr management.
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It’s the result of numbers of factors I reckon.
But I do wonder if their decline in sales are correlated with their market research expenditure and their shift towards big data/predictive analytics/marketing pseudo-science/'”insert whatever-u-call-it-buzzword” analytics. They were generating insights using their internal data with the wrong assumption that it is representative of the entire aus shopping population and using the insights for their campaigns.
Any first semester pimple faced stats student would know that sampling from your own data leads to a bias sample. This is proven by the recent Roy Morgan research, which showed that Aldi customers are entirely different to Woolworths shoppers.
i say it’s the beginning of the end for big data/predictive analytics/marketing pseudo-science/'”insert whatever-u-call-it-buzzword” analytics.
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From only shopping at Woollies to now mainly shopping at Coles it is because Coles have the Vitasoy Oat Milk, the Buckwheat Flour, the chicken marylands and the vac-packed meat. I pay little attention to marketing, except that I will do a couple of shops at Woollies to get some school vouchers over the next weeks (will also have to duck into Coles for the things I can only get there tho).
Woollies, stop eliminating products that I want and I will shop at your stores!
PS: My Mum has converted to Aldi for similar reasons.
PPS: I own Woollies shares! And I feel like a mug for doing so.
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the first thing i look for in a supermarket? how close it is to my house. after that, whether they stock aussie & independent brands. after that, quality of goods. after that, price. way, way, waaaaaay after that, the marketing/advertising campaigns.
adguys overestimate how important they are to consumer staple brands. down down, cheap cheap, it’s all the same thing.
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It will horrify many, but surprise none, to know that there is no Woolies brand guideline document. Which explains a lot.
They also continue to “disappear” staff to avoid awkward redundancy headlines.
The rest, if not all can be put down to utterly incompetent management. Rumours are that they are going to change how they approach loyalty. Stand by for another debacle…
Coles and Aldi don’t need luck or strategy. Patience will deliver them success.
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decline in sales? let me give you free advice woolworths- your fruit and vege quality is below c grade, there is no client service, your check out staff are bland, the foods and products you stock are 1980’s, your whole product range is opposite of progressive countries overseas and the foods you stock are not what the people really want to consume?? ah, and let’s not forget the vegan and vegetarian foods you lack and that 99.9% of all your foods, even the health foods are full of toxins, sugars, preservatives etc!!! there you go, free advice…..how about a restructure with real ‘in touch’ humans running the company!! I’d manage the company for a quarter of what your ceo gets now!!
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It’s insulting to think that this is the way Woolworths have decided to speak to their customers. With a 20 year old pop star we’ve barely or never heard of, and the Birds Eye birds recoloured. Talk about cheap. Add that to the injury of their overinflated prices and less than fresh offering and tired customer service and you can see why customers are saying fuck you. The 80’s called, they want their ad campaign and their outdated supermarket back.
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As I was saying before my little finger prematurely tipped the send button, the bloke who advised Woollies should have “held their course” to avoid the prang appears to have precedent on his side. Just look at Bunnings v Masters. No “cheap cheap” there. Only LPED, banged out with consistency and a music bed that goes back decades but doesn’t irritate, plus an in-store customer experience that’s pleasant and knowledgeable. Wesfarmers appear to have the game sorted there.
Alan Robertson
Kinesis Media.
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I used to alternate between Coles and Woolies online shopping. Every time I bought a lettuce from Coles it was big, fresh and delicious. The next fortnight it was Woolies turn – smaller, significantly less fresh and even almost hollow in the centre…not to mention slightly bitter. Also carrots that would bend rather than snap and green on the loose potatoes. Fresh food people….what a joke.
Items I liked to buy have gone and been replaced by their homebrand equiv – which actually isn’t as good. Some items have gone and there’s NO replacement for them.
But the crowning glory is Woolies new online grocery upgrade – it’s hopeless. Slow, it freezes, i can’t search for stuff, it won’t scroll at times, it has oversized product boxes but with tiny print of the items. I can’t stress enough how terrible it is. I now do ALL my online orders at Coles and since it appears Woolies aren’t going to fix their website I’ve even unsubscribed from their email specials. I’ve washed my hands of them completely.
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Can’t fault anything in the article really.
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Woolworths continues to be a case study for a business that has lost its way. They’ve forgotten their core and gone to tackle Wesfarmers head on. Although they have moved aggressively to take market share off Bunnings, most of it has been at the cost of their supermarket chain. They’ve also ignored the ability for Bunnings to fight back and hold its market share, so much so their Master business break even point has been extended for later in the future. That said, they still have an opportunity to turn around their business. Only if they can prepare to stop or slow down their Master store openings and instead use that capital to fund improvements for customer centric systems, processes and operations in their day to day activities.
One of the main flaws of the Woolworths marketing strategy is the “fresh food people” is not in line with what they deliver to their customers. Unlike Coles, they’ve not invested time and effort to improve the look and value add of their stores. Instead they’ve only looked to fill their own pockets. For Woolworths to hold its market share it will need to become leaner and more efficient. It will need to make hard decisions and work on making it easier and more valuable for the customer to shop with them.
The lesson here is not only to keep on brand, but to deliver on your brands promise day in and day out.
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How about allowing us to buy brands we know and not replacing them with all the Woolies so-called Select brands!
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Leaving aside the Masters debacle, the problem seems to be that Woolworths’ supermarkets have no identity nor plan of business. It really seems to be follow the leader and hope we get a lucky break. I doubt that even a food poisoning outbreak at coles would help them much at present. They want to remain a top brand retailer and yet market cheaper products. The word cheap, is cheap across the board, in quality as well.
They have no nimbleness in the market. New or seasonal products can’t be introduces with any speed, nor do they appear to have any localised product ranges. Their range of ethnic foods is the same no matter where they are situated. New brands or ranges are not promoted or welcomed. It is as if you are annoying if you don’t want what they stock. It is almost as if they have taken the form guide from the old USSR shops.
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Where the fuck do you start?
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Bring back Samantha Jade
scantily clothed in the freezer Isle if possible
Some agency chump should win a prize for that
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Bolat, I have long suspected that, so I tend to agree with you.
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Great article
I honestly don’t spare a second deciding on which supermarket to go to. If I’m nearest Coles I go there, Woolworths, there. I also could not tell you anything different about what they have got or what they are like in terms of food or price. I think I’m probably the exception to the rule, but I just consider them to be one and the same.
I do think there is a place for a more upmarket supermarket though, one that focuses on premium, ready to eat foods, oven pizzas, quality sandwhiches, fresh fruit bars, curry counters – I’d go there for sure! Thomas Ducks was close but it tried to be too farmy.
I’m hungry!
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If you apply any reasonable business model Woolworths have failed. For example their Mount Eliza store is jumbled in every aspect and customers go across the road to IGA for a modern approach.
Range of goods is limited, fresh is never fresh,pricing is poor and functionality leave much to be desired.
Corporations such as Woolworths treat their customers with distain in all aspects.
Management need to focus on the business and what the customers require, not what they believe the customers require.
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Dropping the products people want to buy (and will pay a premium for) in favour of Woolworths Select. An ancient idea poorly executed.
Also known as making shareholder value more important than serving the customer. What could possibly go wrong?
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@ richie – agree with you and in fact, Woolies have already dipped a toe in the water. Their new (ish) store in Double Bay, Sydney is amazing and should be used as the template for Woolies. Amazing fitout and design, fantastic service, amazing range, premium quality meat, freshest F+V, cheeses, seafood, bakery etc etc, This store really does the whole ‘shopping as an experience” well.
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Hi Woolies PR Welcome to the discussion. Think the quote about shopping as an experience was a bit of a giveaway…
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Too many good people let go, too many mediocre people hired, too much happy clapping.
Bring back Greg Foran from Walmart, give him 5 years with no interference and watch Coles go down.
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Groucho – your observation of happy clapping rings even more true as they are based in the Hills, right next door to Hillsong. Join the dots and pray Greg makes a return.
Liam must be new in PR and not know that Thomas Dux is / was their premium offering. There is nothing redeeming about the big-but-bland Double Bay store. “It has a cheese room” is all I’ve heard of note. And if a cheese room is your biggest experience point then you’ve already lost. The Dan’s next door is of note though. As is about Food beneath.
Overall Woolies seems to be ripening for split up and takeover / sale. Masters is a debacle; Big W declining terminally; Financial Services are flailing; Rewards are valueless; Woolies itself jumping at the shadows of Coles, Aldi and Lidl.
Bye bye Woolies, it was nice knowing you. I give it 3 years.
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Hi despise shopping at Woolworths. I’ve heard too many stories from too many people in the fresh food industry about how Woolworths screw their producers for every dollar. And I’m sure the general consumer has too.
The only reason I might go there occasionally, is for convenience. Similar to running to 7/11 for toilet rolls at 11pm at night. I don’t like going there either, but both stores fulfill a need. There is no (positive) emotional attachment to either of them.
I LOVE ALDI. I feel like I am getting value for every dollar I spend. My partner and I (who incidentally earn over $400k between us) love cramming our Aldi bags full of Aldi goodies and paying half the price of other supermarkets at the counter. Sure, they don’t have everything, but we head to our smaller retailers to get what we can’t find there.
WOOLWORTHS = GREEDY. ALDI = VALUE
Until they can change the above equation in people’s head, they will continue to falter.
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Woollies ANZAC marketing is still Fresh in my Memory.
Take me a while before I want to go back and reward them with my $$$$$$.
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Bring back some customer service and I may consider shopping at woolies again…. I am tired of having to self checkout my huge weekly shop and pack everything myself….I can pay half the price and do that at Aldi
Put some staff on the checkout counters…..!
It is a false economy to chop staff on the floor – chop them in your admin departments instead if you have to but you will get fewer and fewer customers if they can’t find staff to help them.
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Is that the longest article ever posted on Mumbrella?
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Hi Say What?
No.
Cheers,
Alex – editor, Mumbrella
Marketing 101 = understand what consumers value, offer products and services that meet their needs, create a great and consistent brand experience that delivers on the promise, communicate it, and proof it. Not rocket science really. So where have they gone wrong…Hmmm where do you start…
– they lost sight of what customers value and replaced their favourite / trusted brands with home brands (that they could make a greater margin on)
– they screwed their suppliers, forcing them to produce home brand versions of their products that they had invested millions in, or else risk being deleted from supply
– They force fmcg brands to spend in their media channels so they can make more money
– they force their suppliers to be on sale more than 30 weeks per year, yet don’t reduce their profit margin, but force suppliers to carry the loss for risk of diminishing shelf space, prominence or supply
And I could go on.
– More like the “mouldy food people” than fresh
– terrible environment with narrow isles
– worst car parks ever
Kind of nice to see them get their just deserves. Greed eventually catches up with you.
Here is some free advice:
– start building valuable partnerships with your suppliers and stop screwing them for your own gain. Great businesses are built from win / win relationships
– make a promise you can actually deliver on
– allow fmcg brands to invest in their brands – not line your pockets
– get off the always on sale drug – you are actually reducing the value of the category, brands and products, not driving profit for anyone – and I’ve seen econometric modelling that proves it
Nice to see your cheap cheap (horrendous campaign) fall off its perch.
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Even with some bias, I think the Mumbrella comments here provides better insight than what Woolies’ big data analytics will ever provide. I wonder if their Big data analytics will tell them ‘why’ people dislike Woolies’ or ‘why’ they are changing to shopping at Aldi? From what I can see, Woolies Big data just looks at answering the where, what, when, who questions and makes wild assumptions of ‘why’ based on the other 4 Ws. Not to mention sampling bias and omitted variable bias, which are huge problems in any predictive models and a number of other issues i can’t be bothered explaining.
If the primary purpose of big data analytics at Woolies is to make assumptions on why the customer is doing what they are doing from their actions then it’s as dead as a doorknob. (do i need to Harvard reference when i am commenting here?).
If only Woolies asked instead of assume then who knows….
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Coles beat them to it to the Master Chef sponsorship.
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Now imagine the banks have some competition applied from overseas
We just need govt to make it wasier to generate a banking licence… Then we will all be better off
Competition is something Aust is yet to learn about
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This is the way business and the whole country should be run- the organisation underperfoms and you are out.
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What, Leo Burnett escapes all blame?
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Yep, they’re even more screwed than they know.
Wait till Amazon get serious here.
First, Big W will die (mercy killing, really).
Then Woolies.
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Maybe they should review their marketing agency panel and get some professionals in to turn it around. Not amatures causing bad PR with distasteful ANZAC campaigns.
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I know this is Mumbrella, but the best creative teams in the world can’t fix the customer experience. Really insightful comments here from Nic about the dynamics of the supply chain and further proof that this organisation needs to go right back to basics. Product, not promotion.
As a frustrated customer, with a Woolies down the road, I suggested starting with abandoning the “Woolworths Select” experiment and instead stocking the products/brands people want to buy, many of which they could easily justify a premium for if they create the right shopping environment. And then maybe a delicatessen that doesn’t look like 1978 and an artisan baker with the smell of fresh bread wafting around?
Or hire another ad agency and cross fingers?
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I have a Coles and a Woolworths next to each other in the same shopping centre. Coles is large, well lit, modern and has self service check outs as well as lots of registers. Woolworths hasn’t been updated in years, has less range, always has cues. Often does not have a single register open apart from the express lines and the staff try and tell you “jokes” and ask personal questions when you’re just trying to buy some milk.
It’s pretty clear why it’s empty and the one next door is packed. It takes longer to get something in the empty supermarket.
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# 1 Problem – we don’t believe the hype – I usually do my weekly food only shop near my gym after yoga… usual cost between $50 and $60 …. nursing a sore shoulder, so go to Woolies Bondi Junction instead … mostly same items $80
#2 Problem – Home Brand – most of us think Woolies are killing off Australian suppliers and supplying inferior products
#3 Problem – subconsciously we suspect they are r*ping the farmers … the big supermarkets (oh and our government by the way) exercising short term profit strategies that have severe long term affects for our country.
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Simple question , so I will proffer my unqualified and simple answer.
Perception that they were the top dogs, the leaders of the pack and the best fresh food people in Australia. Bean counters and greedy corporate policy to the fore, they started and eventually became champions at the lucrative black art of customer deception.
They strode forward in the busy world like the armies of Genghis Khan, and allegedly began treating everyone, from landlords , to farmers, to truckers, to employees, to customers, like peasantry, and then had the audacity to sing Cheap Cheap, and profess to be the home makers friend.
There used to be an ancient axiom, now fading into antiquity , but perhaps still traceable…maybe even worthy. You can fool some of the people all of the time and all of the people some of the time, but… etc
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There’s a common theme in these comments; lack of awareness in regards to consumer perception of their brand as a supermarket and offerings has resulted in a loss of their positioning, and has resulted as it seems, in a loss of competitive advantages to other supermarkets.
As stated above, it’s basic marketing; understanding the values and needs of consumers in order be seen as valuable and a better option for consumers.
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For nearly a decade WW’s failed to invest in store refurbishment.
WW’s failed to be competitive on grocery prices
WW’s pricing was about all about profit not about being competitive
WW’s ceased to innovate – literally ceased.
And rather than actually devote time and money to fixing those problems [like Coles had spent the last five years doing] they hoped a couple of new ad campaigns would fix it.
They were wrong.
The problem here isn’t ‘Cheap Cheap’, or Leo Burnett, or Tony Phillips.
The problem is the years of disfunction and laziness at WW’s.
To blame the advertising or the people who created it is a cop out.
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Woolies have been beaten by Coles in store sales for the past 20 quarters. Count em, that’s over 5 years. No half competent company Board would allow that to happen. Unless you had a hide, and a retail brain, as thick as Woolies.
They brought in Grant O’Brien as CEO because he was Roger Corbett’s yes man and said yes to continuing to rip off shoppers so the greedy Board and investors made their dough. The other contender, Greg Foran, a retail genius, told them they needed to compete with Coles on price to survive. Greed won out, and look where it got them.
They’re rooted.
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I’m a bit late to this party but I do think a lot of the commenters have missed a large part of the point
the reason Woolworths have fallen behind Coles is due in large part to a lack of funds caused by their disastrous Masters investment. That has taken up a huge amount of management time and sucked in a gigantic (billions) amount of dollars, the opportunity cost of which is more investment in store openings, refurbs and other service improvements.
I do agree that the Cheap Cheap campaign is disgraceful in every way, that the Droga campaigns previous to that were wallpaper at best and that the brand as a whole has lost a lot of it’s meaning. But I also believe that advertising is in no way the core driver of WWS down turn, it’s more that Coles have got their shit together, Aldi are a really slick operation providing outstanding value and as above, WWS haven’t had the dollars to invest in improving their store offer
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I personally stopped shopping in Woolworths due to poor customer service. In the past, when I had a small basket with goods, the checkout-chick would tell me to take the basket, once emptied, and place it in some stack.
THIS IS HER DAMN JOB!!!!
A customer should never be asked to do the work of the shop keeper! If I don’t want service, then I go to Aldi, where a lack of service (albeit with cheaper prices) is expected.
So I now shop at Coles…
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Woolies do not have a problem that advertising can solve.
The sum of the parts is an altogether poor brand experience – across the width of product range, apalling service, high price without any justification, a lack of differentiation on ‘fresh’ (instore or otherwise), and a second place at best on NPD. No, make that a poor third.
Back to basics; back to customer needs. Marketing is more than advertising.
Good article.
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I am thoroughly disgusted by the way Woolworths portrays prices in their supermarkets, they have one big price in the middle of their fruit and vegs for say $3.48 and the items placed under the sign are priced at $4.99 and $6.99. The actual item for $3.48 is no where near the $3.48 sign so you think the items directly under the sign are $3.48. I consider this misleading advertising. Also, I refuse to buy Select macaroni because years ago it was Home Brand macaroni priced at 59 cents, then one day the Home Brand macaroni disappeared and the next day it was Select at $1.29, they have since dropped the price to $1.00. Wow what a price jump. They must have made a fortune just by changing the packaging. The product in the bag was the same. I now shop at Aldi and Coles. The people at Coles actually smile and make you feel welcome.
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I can’t figure out what their problem is. I am a Woolies customer since Adam was…etc but it is so plain obvious to the layman that their prices are way too high compared to the equivalent product elsewhere. Why is it so hard for for all these high flying directors with huge salaries to understand this.
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