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Coles vs Woolies: Where to next in the supermarket wars?
Lisa Ronson last week took the industry by surprise, announcing her departure as CMO of Coles. At a crucial time for the retail sector, Mumbrella’s Calum Jaspan looks at where things are now, and what next in the battle between fierce rivals Coles and Woolworths.
Seven years ago, Mumbrella asked the question “where did it all go wrong?” for Woolworths.
Today, there are many in the industry who are beginning to wonder if Coles is the one who has lost its way.
The surprise departure of one of Australia’s highest profile CMOs Lisa Ronson has only added fuel to the fire and the immediate industry reaction has been centered around whether or not she was pushed.
Coles’ CMO Lisa Ronson is on the move
Coles and Woolworths have a combined market capitalisation of $73 billion and an estimated combined media spend of over $250m making this one of adland’s most important and most watched battles.
So how does the Red vs Green battle stack up?
How does the market like them?
For Woolies in July 2015, the company’s share price was firmly on its way down after reaching its then-peak of $31.38 in May the year prior, continuing to drop for the next year until it reached a 10-year low of $17.79 in 2016.
Since then, it has all been uphill, but for a blip in March 2020. The same point applies largely similar to its market capitalisation too.
Coles and Woolworths share price over the past five years
Coles’ share price has risen 50% since listing on its own in a demerger from Wesfarmers in 2018, while Woolworths has further risen by almost 77%. As of 22 August, Coles’ share price sits at $19.36, its highest ever recorded.
Sales growth has also been kind to both in the past few years. For Coles, 2019 saw 3.1% growth, 2020 6.9%, and again 3.1% in 2021. For Woolies, a similar, yet slightly better story, of 3.4% sales growth in 2019, then 8.1% then 5.7% in 2021.
With both posting FY2022 results this week, there may be some indication there as to whether performance has played a role at all in Ronson’s departure.
A prominent marketer, who requested anonymity says: “Looking at share price, both companies have had a good time since 2019. But I think their uplifts were based on demand, not brand activity, and they would both be in the same position regardless of who was at the helm.”
Now, with COVID increasingly looking like it is a lesser consideration, comms will likely play more of a role for the two brands, and connecting it from top to bottom will be important to get those vital steps ahead of the competitor.
The competing strategies
Andrew Hicks was shifted across to director of marketing for food and supermarkets in 2015 after a successful stint running marketing for its liquor division, before getting the nod to become Woolworths Group’s first chief marketing officer in 2019, shortly after Ronson’s appointment.
Hicks, the first CMO for Woolworths Group
During Hick’s stint, he hasn’t made many wholesale changes to the group’s agency roster since bringing in M&C Saatchi in the early days of his tenure at the supermarket, ditching Leo Burnett after just two years. Since then, he has doubled down on his agencies, establishing Woolworths@DAN (now Woolworths@Dentsu) in 2018, and retaining Dentsu in 2020. Its relationship with M&C has also grown during this period, setting up a bespoke agency, ‘Greenhouse’, and then adding paid social creative and production earlier this year.
All of this is now housed in Woolies’ ‘Innovation Hub’ in Surry Hills, Sydney, also home to digital arm WooliesX, and Cartology, the retail media business set up three years ago.
For Coles, the decision to reappoint its Omnicom agencies, OMD, DDB and TBWA came as a surprise to some in the industry, beating out the surprise pairing of Accenture Interactive and Initiative.
Coles’ new bespoke agency with Omnicom pays tribute to its heritage
In step with many actions the pairing takes, the bespoke setup looks as though at least in some way it is following in Woolie’s footsteps, bringing all its capabilities under one roof.
Coles again signaled a similar path earlier this year by launching its own retail media setup with a number of impressive hires. You can read more about that in depth here.
With Ronson’s departure made public three weeks to the day later, sticking with its incumbents potentially makes a little more sense now the dust has settled.
While it is still unknown the nature of the sudden departure, the hunt for a new CMO has only just begun, and Ronson is yet to land anywhere (publicly). With chief of commercial and express, Leah Weckert taking on the marketing responsibilities in the meantime, it doesn’t appear as this wasn’t anticipated.
It is worth noting this isn’t the first time Ronson has departed a brand shortly after appointing a number of new agencies. She resigned from Tourism Australia just after appointing two new agencies in January 2019, however in that instance, stuck around a few extra months to help onboard its new partners.
The battlegrounds they are fighting over
In mid-2021, Coles launched its ‘Together to Zero’ campaign announcing its sustainability credentials and strategy, and a pledge to stop giving away plastic collectibles.
On the very same day, Woolworths also launched a sustainability campaign, and one month later, launched its own sustainable play collection, ‘Woolworths Bricks’ made from 80% recycled materials, with up to 20% plastic added to pieces to increase strength for transparency.
Nearly a year later after committing to no longer giving away plastic toys as part of its rewards program, Coles recently partnered with Warner Bros. Consumer Products to launch its first 100% Forest Stewardship Council (FSC) certified cardboard collectibles, Magical Builders.
The Hogwarts collectibles one-upped Woolies by making them fully recyclable in household recycling bins.
In step, Woolworths then launched a new in-store collectible the same week, partnering with Disney on a collection of ‘Fix-Ems’ made from at least 80% recycled material.
Green had to one-up Red though, opting for 36 unique Fix-Ems, compared to the measly 35 characters available in the Harry Potter set.
Collectibles have been a big feature for both in the past, with Ronson’s first set seeing a return of the ‘Little Shop’ items, while a success in some measures, attracted significant attention for the heavy use of plastics, even being labelled “greenwashing” in some instances, and in others, proving the target of derision from one of its lesser rivals.
Ronson launching the Harry Potter Magical Builders
Another set, the Stikeez had also come under criticism, with one complaint labeling it “gambling for kids”.
Even challenger brand IGA took the opportunity to take a shot at Coles over the Little Shop collectibles.
In its ‘Together to Zero’ campaign, Coles quotes: “by June 2025 our stores will be powered by renewable energy: our dream is to be Australia’s most sustainable supermarket”.
This marks a clear shift in ambitions for Coles and a flag in the ground for its clean credentials. It’s Christmas campaign two years prior, and Ronson’s first holiday season campaign, quoted her saying its ambition was to “become Australia’s most-trusted retailer”.
While Coles has consistently ranked as the second “most trusted brand” according to Roy Morgan over the past few years, potentially the ever-present top spot belonging to Woolies may have prompted the shift in ambition.
Woolies’ FIX-EMs collectibles
Sustainability has now become the focus for both brands, and for Australians, both are leading the (somewhat poor) charge.
In a survey, of the one in four who could name a brand that was leading this charge; one in five named Woolworths, one in ten named Coles and one in 20 named Cotton On.
In March this year, Woolies also topped the list of ‘most prolific brands on sustainability’, however with BHP being sandwiched in second place between Coles in third, the exact definition of “prolific” is up for contention.
“Our purpose is built around creating a better tomorrow, and as Australia’s largest food and everyday needs retailer, we have a responsibility to share our environmental ambitions and hold ourselves accountable to our customers and shareholders,” Andrew Hicks said at the time.
He added: “Sustainability is now a core pillar of our re-imagined Today’s Fresh Food People platform, featuring prominently in our advertising and marketing, and integrated in our long-term strategy.
In 2020, Woolworths Group released its Better Tomorrow 2025 Plan, charting its sustainability ambitions across the pillars of people, product and planet. In line with its ambitions, Woolworths has announced a range of initiatives over the last two years including: a transition to 100% renewable energy by 2025; a commitment to become net carbon positive by 2050 if not sooner; validation of its climate targets by the Science Based Targets Initiate; the conversion of meat trays to be 100% recyclable; and the removal of single-use plastic picnicware.
The Little Shop items proved divisive
In terms of relaying those credentials – and winning a comms fight from where it could be seen as being in second place – they will need to be “much more overt with verified credentials, like the impressive performance in last year’s World Benchmarking Alliance 2021 Food and Agriculture Benchmark”, says Tim Riches, group strategy director at branding agency, Principals.
The marketers says however that in their opinion, Coles are the leader on sustainability, making their “net zero ambitions a lot more overt than their counterparts”.
It appears Coles are doing something right in this department too. Surveying 350 of the world’s most influential food and agriculture companies “on their contributions to transforming our global food system”, Coles Group came in at an impressive 12th place, the second highest retailer behind UK giant Tesco in seventh place.
Woolworths also came in at a very respectable 27th.
The battle for most sustainable grew from “most trusted”, and before then, it was a battle around price. Winning footfall off each other is a highly contested arena and one where margins count.
According to statistics via the Statista Research Department, as of July 2020, 91% of Australians ‘cross-shop’, as opposed to just 5% who are Woolies-loyal, and 4% for Coles.
Online shopping, which continues to prove a bigger slice of the pie is a different story though, with 40% going Woolies only, and 37% Coles. The rest is made up of cross-shoppers. With Coles recently entering the retail media space, and more Australians shopping online, winning favour with consumers over share will become a much more valuable target than footfall.
Competing over dollars and cents
Woolies once looked to compete on the price front, which took focus in the early 2010s with its ‘Cheap Cheap’ campaigns via Leo Burnett. These attracted some negative perceptions from the market in a race-to-the-bottom fight with Coles who had proven successful through the aforementioned ‘Down, Down’ ads.
After several incarnations, Coles moved away from ‘Down, Down’ in 2018, with a spokesperson telling Mumbrella: “We know our customers care about price, but they also care about where their food comes from, they care about their community and they care about the environment.”
This was the new battleground: quality and care, potentially attempting to then catch up on Woolies, who had been building its Fresh Food credentials for years.
Now, quality has taken a focus, alongside sustainability in delivering the best for Aussies, despite being at a time where the cost of living is hitting wallets.
Coles’ new ‘Value the Australian Way’ strategic point is a “fail as a line” for Riches. “It’s more like the strategy statement than the creative expression. It lacks charm, it’s a bit pompous, and most importantly, doesn’t sound like something a regular person would say.”
“At the product level, food credentials also matter, particularly when it comes to making own-brand private label products not only cheaper, but more appealing,” adds Riches.
“Getting this right will be a really important part of the battle in this era of the high cost of living. The winner will be better at helping people save money without feeling that they’re giving anything up in terms of health, enjoyment and sophistication. Masterbrand food credentials are central to that.”
As it happens, while writing this Coles has just announced it has locked in the price of 1,168 products across supermarkets and online until at least 31 January 2023, “to help household budgets go further”.
An interesting and timely development, and maybe a shift for Coles to try and reestablish itself as being the more cost-friendly option.
Playing up into the colours
You can mark Woolies’ recent shift in brand by way of its move towards a fully green colour palette.
Looking at ads from Woolies in the mid-2010s, after it opted to leave behind “cheap cheap” you could be forgiven for thinking you were watching a Coles ad, but for the Woolies logo that pops up occasionally.
You contrast M&C Saatchi’s first work with the retailer to its first brand campaign as ‘Today’s Fresh Food People’ last year, and the result is night and day in terms of defining the brand.
Hicks moved to modernise the ‘Fresh Food People’ line – adding a new spin, yet avoiding a move away from one of the most recognisible taglines in Australian branding. If anything, you have to give it to them on consistency. Just look at this campaign from 1987.
It was at this point that the brand also began adopting the use of ‘Woolies’ in its marketing, Hicks acknowledging its use by customers as a term of endearment.
For Coles, it flipped the category on its head in 2010 when it launched ‘Down, Down’ via Big Red, which instantly drove home its message by getting stuck in the heads of millions of Australians.
Big Red was one of the big storylines for Coles this year. As it shook out, it became clearer Ted Horton’s agency would be the big loser of Ronson and Co.’s RFP, and despite the best efforts from Coles’ marketing team to keep the conveniently named agency involved in some capacity, as reported by Mumbrella, it was harshly dropped a second time in a matter of months.
As Riches puts it, Coles has a trickier balance to strike between quality and value than Woolies, which has “better brand codes”.
“‘The Red One’ is stuck at the moment with its brand codes that are holding it back as it strives to reposition from the ‘cheap and cheerful’ ‘down down’ era to something more multi-dimensional that reflects our complex relationship with food.”
He continues: “Red is associated with price promotion; “red spot special” anyone? And overall, the Coles branding is very big-box retail – to its detriment, in my view.”
Referring back to the last incarnation of the “Down, Down” ads above, Coles’ shift has also come at the cost of dropping its red-heavy ads, if anything a distinctive asset.
Looking at the 2015 ‘Always at Woolworths’ ad above too, the prominence of red punctuates Riches’ point.
While it did flip-flop for a little while trying to compete on price, Riches reckons Woolies “has long set out to own the world of the producer, with imagery that blurred the line between producer and retailer”, and has gone a step further in recent times to shifting its image to be that of the “grocer”, enforcing the perception of food quality.
“They look like they know their stuff, a bit like Bunnings’ people.”
“Woolies is a clear winner when it comes to defined personality – it has a cheerful optimism, upbeat music and better depiction of people. Its use of identity elements and brand codes is also clearly better – strong use of green, recognisable sonic branding. Taken together it makes Woolies a demonstrably more effective brand.
Head of strategy at WhiteGrey, Nomfundo Msomi agrees with Riches, saying: “There’s something distinctly trustworthy and uplifting about the Woolworths supermarket brand and how consistently it’s delivered across brand experience, from logo to sonic branding.”
This point was proven, as shortly after the two 2021 campaigns were released, research from marketing analytics and strategic advisory agency, Forethought showed that Woolworths’ ‘Today’s Fresh Food People’ TVC displayed the power of distinctive brand assets, with nine in ten surveyed Australians connecting the ad to the brand in a test, far more than those that did the same for the ‘Together to Zero’ spot.
“That said,” Riches continues, “There are dated and not super user-friendly elements to the Woolworth brand – particularly the Woolworths wordmark itself. Surprisingly, under the logo, both brands use near-identical circular design elements to identify price and other promotions. “
The challenge ahead
According to Riches, Coles appears to have focused on “impact over sense of personality or quality cues”, as well as not having a single well-integrated system that flows across advertising, online, in-store and on-pack.”
He adds the result has left it appearing a little fragmented and “a bit down market”. It does appear that connecting its marketing, in-store, online and products is one of the big tasks at hand for Smith Street. One that will prove to be very complex however.
For Msomi, “Woolworths is literally greener and more earnest than ever, just in time for when customers are looking for that reassurance,” this adding to why she believes the Green half are the “clear frontrunners” right now.
With Big Red out and Omnicom taking sole direction of the creative product at Coles, this could see it carve out a distinctive brand once again. Adding in Deloitte Digital also looks as if it will attempt to challenge Woolies in its tech and data capabilities.
While some may say Coles has “lost ground” on Woolies in recent years, this might be only viewed through the lens of what Woolies is doing, rather than what is expected from a retailer.
“Do they need to catch up?” asks the marketer and industry onlooker. “Can they just keep doing what they’re doing, and is that enough? It should be enough, because they’re not trying to be anything else. They are just being a supermarket and that should be ok.”
“There is no reason to veer away from that strategic platform, that should last about five years.”
A big part of this will also depend on who lands in Ronson’s seat next, continues the marketer.
Alongside this, the challenger in Aldi continues to try and provide a third major option for Australians, increasing its footprint and picking up attention for its left-field ads through creative agency BMF.
Rumours of a media pitch in November continue to provide something that could shake things up for Woolies and Hicks at the end of this year.
New Dentsu Media CEO Danny Bass would likely throw everything he has at retaining the group’s crown jewel, while you’d suspect IPG would look to make up for what it missed out on with Coles last month, replacing the multi-million dollar-sized hole that was left after OMD nabbed it in 2016 from UM. And finally WPP. After missing out on Coles through a conflict, Woolies might prove exactly the piece of business GroupM CEO, Aimee Buchanan could put her stamp on the group with one year into her tenure.
For Woolies though, the challenge is a little different. It’s the soon-to-be-confirmed $150 million purchase of Shopper is further proof of a clear strategic plan as the retail media sector looks to emulate overseas growth and success.
Woolies seem like they are “looking at the bigger picture” the marketer says, also questioning what it might look to do with that Shopper purchase. “There is a lot going on there. Whether that is good or bad, I don’t know.”
Whether this will happen, we’ll need to wait and see. But this sector doesn’t appear to be slowing down.
As for Australians, these two brands touch around 95% of households annually, so whatever direction they go in next make sure to keep an eye out.
Calum Jaspan was news editor at Mumbrella, based in Melbourne. He was also the producer and host of the Mumbrellacast. He left Mumbrella in May 2023.
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Andrew HicksBig RedColesColes GroupLisa RonsonOmnicomretailerSupermarketWoolworthsWoolworths Group
Suppose you can now discard principles from ever working with Coles or Lisa in the future. Heheheh.
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Outstanding, objective analysis. Nice work.
“The Fresh Food People” is a simple, powerful statement first coined when supermarkets’ biggest challenge was winning share from the local greengrocer, back in the early 80s. Coles, on the other hand, has always been price/value focused and there’s not a lot wrong with that. Nor is there anything wrong with seeking to overlay green and sustainability credentials. But, with food costs spiralling, I know where they’re likely to get the best return.
Unfortunately for Big Red, their role is misunderstood. They have not been responsible for brand since Lisa Ronson and DDB rocked up with the incomprehensible “Value the Australian Way’. Rather, they have been the infantry, churning out retail, BTL and digital work in time frames and at prices that few agencies could get anywhere near. Watch this space, I reckon.
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This is just what Mumbrella needs. Deep, detailed, considered pieces.
Well done Calum. Good to see Mumbrella slowly getting back into the detail that it has previously been renowned for.
More of this please!
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I’m a marketer and a long-suffering consumer too!. Why can’t you guys try and keep it simple and see life through the eyes of a consumer and not try and be too pompous yourselves!
Woolies main message is “The fresh food people” – that’s clear and uncontroversial and is backed up by their advertising, especially involving kids sport and their colour scheme!
Whereas Coles says “Value the Australian Way” – I have absolutely no idea what that means! Does ANYONE!! And as for Down, Down!! What that says to me is that they admit to have been overcharging (Up, Up!!) for years!!
ALDI is no better with its (frankly) silly tag line “Good, Different”!! Although it is certainly different and probably competes in a different market sector.
Whether trying to focus on sustainability and concern for the planet for any of them, that remains to be seen – all of them still sell far too much in plastic packaging, including straws! It makes them seem hypocritical!!
IGA (which you didn’t cover) tries to emphasise the local nature of their business – that’s good, straightforward and worthwhile.
Note, I have no contact whatsoever with any of the B2C markets – just an educated observer!
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