Tale of the ticker tape: How Woolworths’ recent performance follows its revolving agency issues
As Woolworths beds in its third new creative agency in five years Simon Canning looks at the correlation between the marketing flux and underperformance of the supermarket chain.
Woolworths’ decision to sack its third agency in five years signals a crisis point in the future of the retailer which, while it remains dominant by virtue of its scale, is struggling to maintain brand equity and public support.
There is a curious correlation between Woolworths’ market performance and its revolving door of agencies over the past five years.
The move by Woolworths back to M&C Saatchi – five years after the retailer abandoned the agency in favour of the then hotshop Droga5 – will be, in the words of one observer, like slipping on a pair of comfortable and reliable old boots. It’s a brand M&C knows all too well.
And role of Quantium in this mess? This part-owned analytics business, supposedly staffed by some of the best modellers and predictive analysts in the country, is either being ignored by Woolworths management or is providing decision makers with some very wrong propensity models. The correlation between the WOW’s acquisition of Quantium and WOW’s slide in market share is telling.
nice article Simon, although I just don’t believe that M&C or any agency will be given control over ‘the direction it chooses in terms of strategy’ and that even if they were, it would not address the core issues that have driven the company’s decline.
In my experience, Woolworths just aren’t set up/conditioned to listen to and certainly not defer to their suppliers on major strategic matters. When I worked on the business back in the dark ages at a time of huge success for the company (share price rose from approx $5 to something close to $20 between 1999 and 2002), most key strategy decisions related to Brand weren’t even decided within the marketing department but driven by Operations, Supply Chain and Buying – marketing was seen as a service provider to the main divisions, rather than a decision maker and direction setter.
I feel immense sympathy for Leo Burnett and their team because the major challenges facing Woolworths are not communication based. As such, your share price analysis is interesting but largely unrelated to ad agency performance. Woolworths have fundamental issues with their operations that have developed over the past 10 years as Coles have caught and past them and Aldi have outflanked them. It’s true that they don’t stand for anything as a brand, but that’s because they deliver nothing distinct, hence their need to attempt to borrow equity off a property such as Jamie Oliver.
I’m certain that if M&C or any agency were allowed to deliver a top class communication program and campaign, it may be able to drive some brand metrics, but until Woolworths get their own house in order and fix their delivery issues around operations, value for money and out of stocks amongst others, their business will continue to founder against better run competitors
It may amaze, but not surprise, that until at least last September, there were no brand guidelines at Woolies.
Not TOV; no design guidelines; no colour ways. Just a thousand bastardised versions of the logo showered across a bazillion different touch points.
This sets the tone for dealing with Woolies internally and externally. All shellac and no wood.
Have to fully endorse Nick Williams’ thoughts, and hope that M&C get the chance to take a lateral view on the construction of WW’s Loyalty program. With such a small % of shoppers actually loyal to WW (or Coles), they are the last people you want to disenfranchise by getting it wrong – again!
I agree totally with Nick Williams. No agency can save Woolworths.
This organisation has been beaten by Coles on sales in every quarter for the last six years. This requires a complete strategic marketing, organisational and cultural change from within. An advertising agency isn’t built to do that massive turnaround process.
Two words can save Woolworths. Greg Foran.
“It is thought DiLallo never got the latitude he had hoped for to help transform the brand at Leo Burnett, and it will be interesting to see if he is given more of an opportunity at M&C.”
I bet my pay check DiLallo’s words would’ve been ‘keep me the fuck away from that account at all costs.’
Correlation without causation. Feel like this article overstates the role of agencies at WOW and understates the importance of decent business strategy
Well…..too bad she cried!….Are Australians Stupid?…I think not. Hey, Woolies’ Coles, we are all sick of you…Well you want Grocery, Liquor, Petrol, Pet Insurance Home and car Insurance, Hardware and more…Well let ALDI show you how its done….You have for to long SCREWED nearly every supplier you have ever dealt with in Australia and I have proof. I have worked for one of these companies over 20 years ago and nothing has changed …just as recent as last Nov/Dec Arnott’s finally stood up to you..and I don’t know the details but BEGA Cheese this month has had some kind of similar problems…WHY well its because there is a NEW PLAYER! YES! Finally!…I have Family that Supplied Fresh Produce to both chains but after 25 years for struggling on the farm by being SCREWED by both chains the farm has been rezoned for recreation and residential…after 150 years this large farm in SA will no longer and will never again supply fresh food to Australians..THANKYOU COLE & WOOLIES….I can only say Australians’ sure we like a bargain but we are not stupid……COLES’ WOOLIES, your days are numbered IF you have shares in these companies think seriously about what the future holds….Frank
An interesting insight into the culture of organisation that is slowly destroying itself.The values and lack of leadership are to blame for much of this. Feb 2016 and still no CEO
Nothing is impossible, Coles turnaround wasn’t easy, it started with DDB’s “feed the family for ten dollars” and was extended into “down down prices” nice evolution Ted!
The whole thrust and essence of success was leveraging the insights that Coles always owned; lowest prices, it had just given up the space for too long a period.
Reignighting a dormant truth and turning the business to where it should have been, thinking no doubt helped by Forthought! Power of Emotional question in creative execution. It was a different challenge to what Woolworths now faces, and something by the way that Tony Phillips had the ability to do after his stellar job at Coles. At least they now have a proven team at MC who know how to build a brand; not just do an ad! Something missing quiet a bit in today’s ad world!
This won’t be the first time clever creative people rebuild a brands strength, and yes, it will definitely take a lateral thinking group working holistically.
With McFarlane in the mix or leading, the clients made a great move.
Good luck to MC, I hope they negotiated a share price marker in their deal, pay for results is a real opportunity for them and perhaps for the whole industry.
Sent on a nice team ride into Melbourne! What a way to travel!
Nick Williams is 100% on the money – it’s still the same.
Thx Woolworths, I’m out looking for a job. Having been actively involved in the Woolworths business, the thing that you have missed entirely is the fact the the new CMO and his team DO NOT HAVE a well thought out marketing plan for the next quarter let alone the next 12 months. They do not give the agency written briefs and have no visionary brand strategy to counteract Coles and Aldi. Their plan is to hope to god M&C will pull them out of the shit. They are a company in crisis without a solid guiding strategy. They will fail, and then they will yet again blame their agency partner and within the next couple of years will change their agency again. A fish rots from the head.