Woolworths marketing overhaul to drive growth

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The management of Woolworths in Australia has unveiled a raft of measures designed to drive growth and profitability in the face of a resurgent challenge to its supremacy, particularly in grocery retailing from arch-rival Coles.

Coles reported sales from food and liquor up 5.5% in the last quarter, compared with 4.4% at Woolworths, the eighth quarter in a row it has outperformed the larger group.

Woolworths’ plans for its main grocery division involve an overhaul of its marketing strategy, the revamp of its multichannel offering and a renewed private-label development drive.

Outlining a five-year plan to double the sales of private-label products at the Woolworths’ supermarket division, director Tjeerd Jegen said the retailer lagged international retailers in terms of the proportion of sales from own-brand items.

Jegen said the retailer planned to capitalise on customers’ increasing level of trust in Woolworths’ three own-brands: Select, Homebrand and Macro.

Woolworths’ private-label penetration is estimated to be about 18% to 20%, up from about 15% in 2008. This is thought to be below that of Coles. Jegen said the revival would be achieved “by expanding our ranges, lowering our prices, improving our quality and strengthening our brand presence”.

Mirroring developments in the UK market, the retailer plans to drive quality perception through customer endorsement. Woolworths set up a ‘Quality Kitchen’ project in May 2010, headed by former Tesco executive, Sally Stagles.

Woolworths is investing Aus$1m (£645,205) in employing a ‘sensory panel’ made up of 100 testers selected from its Everyday Rewards loyalty scheme membership. The panel had reviewed about 1,500 product recipes by November 2011.

Woolworths has outlined multichannel ambitions to cater for the country’s growing demand for online shopping. The retailer will launch a new online supermarket platform in 2012 that utilises customer’s Everyday Rewards loyalty scheme data – captured from in-store and online shopping – to create favourites lists and suggest products to purchase.

In addition, a transactional smartphone application will be introduced. Group chief executive Grant O’Brien said Woolworths can leverage its bricks-and-mortar retail strength, loyalty data and supply chain expertise to deliver value and convenience.