Woolworths’ Homebrand bites the dust as retailer works to turn its fortunes around
Woolworths is scrapping its no-frills Homebrand line in favour of its similarly priced but more upmarket Essentials brand, a year after flagging that consumers had fallen out of love with it.
Reacting to the increased perception that the Woolies Homebrand reflected low quality as well as low price, the embattled retailer will rebrand its house label lines over coming months.
The move to scrap the brand is the first major initiative to be undertaken under new CEO Brad Banducci, who took the helm at the end of February.
Woolworths confirmed the move to consolidate under the Essential line was now underway.
“We have been reviewing the products in all of our own brand ranges to ensure we deliver even greater quality and value for our customers,” a spokesperson said.
“Part of this review will see our current value ranges, Homebrand and Essentials, consolidated into one improved value range called Essentials. The Essentials range as the name suggests are products every home needs both food and non food.
“When customers see each product move to the new Essentials packaging they can be assured the product will offer market leading value for money for our customers.”
The distinctive red-and-white packaging had become a mainstay of the supermarket in the 1980s when the economy was battling under the “recession we had to have” and home-owners were burdened with interest rates of up to 16%.
Barry Urquhart, head of retail analysts Marketing Focus, described the move as the “unforeseen consequence” of the changing market.
“Long-term, traditionally about 12% of Australians have been influenced to buy Black & Gold; cheap generic products,” Urquhart said.
“In pursuit of increased profits Coles and Woolworths have increased that market share of house brand to anywhere from 23% to 28%, but in so doing the expectations of and the acceptance of house brands by consumers has improved appreciably.”
He said that the impact of Aldi on the Australian market could not be underestimated with shoppers flocking to the German brand with little more than its own house brands on the shelf at a rate greater than that experienced in any other market where the supermarket chain has opened its doors.
“The market expectations of Aldi and its products is seen to be better quality and therefore better value than Coles or Woolworths so dropping the bottom end of the product range at Woolworths is appropriate, timely and the sort of thing that you can’t go back on,” he said.
Urquhart said he expected Woolworths to use the Essentials line as part of its marketing going forward as it works to build foot-traffic through the stores.’
In February Woolworths dumped ad agency Leo Burnett, moving the account back to M&C Saatchi after several years away from the agency.
Along with the appointment of the new CEO, the brand has also seen a complete turnover in its marketing department over the past year with a number of high profile departures.
Simon Canning
That is not Woolworths problem. The problems at Woolworths can best be summarised in my view as:
They adverstise a certain product or pricing structure and only keep it for a month or so, eg liptons tea at $3.50 but put price back up.
They advertise cheaper prices, but many items now at Big W can be bought cheaper elsewhere. I have examples.
They terrorise their counter staff who are afraid to offer feedback, because that will see a reduction in casual hours for that person. In other words employee management skills are lousy.
Their stores are getting delapidated, and the fresh food peoples fruit and vegetables are off a few days after buying them.
They can argue about their management skills but the proof of the pudding is in the eating.Masters is a classic example and Big W.
At masters every single male I know says they stock the wrong products. If they were ever right with their model why didn’t they stop growing the number of stores and make what they had work. Shareholders have paid a huge price, which if they are not careful about the company is ripe for takeover.
Big W has joined the race to the bottom in quality of product, particularly clothing, whilst target is heading slightly the other way. empty shelves at Big W doesn’t inspire confidence in management or systems.
All in all it is the contempt that Woolworths show to it’s customers that is damaging it the most. They never consider the customers when withdrawing product from sale aonly their bottom line. The customers and public are sick of their attitude.
Stop advertising what they are not delivering would be a good staff to start the turnaround. It might create some credibility with their Brand name again.
Many Regards Michael
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Another reactive Woolworths decision, now by this retailer’s new management, that not only undermines their multi-tier store brand strategy but also assumes the shopper has not worked out what ‘good enough’ quality actually means. Next WW will try to stretch Select up to the premium quality level that Gold is ill-fitted to deliver, while shoppers will continue to regularly shop at multiple retailers to keep putting more value in their basket/s for the same overall spend.
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This sounds like a decision made with absolutely no insight into how and why people shop at Woolworths in the first place.
Has anyone in the management team actually listened to what customers have to say?
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Good to see the new management continuing the tradition of rearranging the deck chairs.
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Oh no! I’ll have to steal me tampons from Woolies instead
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“When customers see each product move to the new Essentials packaging they can be assured the product will offer market leading value for money for our customers.”
The red packaging gave a perception of low quality. New packaging – and new name will fool us all. Are we consumers this stupid? Maybe we are.
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Yes, they are. Aldi sells exactly the same products but people think its superior.
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@harold, no, Aldi house brands are the same quality or better than the “top tier” Woolworths “Select” range, but are sold at similar prices to Woolworths bottom tier Home Brand range.
It looks like Woolworths are going to simply chop out the cheap range and position their new “Essentials” range at higher prices than Aldi.
So customers who regularly shop at both supermarkets are going to simply see their familiar well priced and good quality Aldi lines but are going to be confronted by unfamiliar lines at Woolies, at higher prices. Fail.
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Why would Woolworths use a name that is already associated with Target. They’ve been using the Essentials name for their private label products for years.
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Good point, I’ve been wondering where I’ve heard that “Essentials” name and now you’ve solved that one for me.
Talking of Wesfarmers, this whole exercise sounds like a thought bubble emanating from a committee meeting. I’m sure there was mighty backslapping going on afterwards, not to mention boot licking of the new CEO and his blinding flash of marketing genius.
Much in the same way that Wesfarmers made a snap decision ten years ago to immediately convert their budget level BILO stores to Coles stores, then eventually to attach the Coles name to Target and Kmart stores. What a good idea, how could they have been so blind up to now. What is this Aldi you speak of? hah they’ll never amount to much.
That was a disaster that they’ve only just recovered from in the last few years. Sales at the new re-branded former BILO stores plummeted and half way through the exercise they had to abruptly stop the changeover to stop the bleeding. When I lived in Old Bar NSW the BILO store only just got converted last year.
What’s the betting that after an abysmal drop in their house brand sales, Woolies will have to backtrack and halt their current spur-of-the-moment exercise.
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