Brand Health Check: Woolworths

Marketing, April 19, 2006 | Go to article overview

Brand Health Check: Woolworths


The retailer's generalist ethos has left it struggling to fend off supermarkets and specialists. Joanna Bowery reports.

Easter is Woolworths' second busiest trading period, and the retailer is pinning its hopes on its extensive egg offering luring shoppers into its stores. The slowdown in consumer spending and competition in the retail sector is hitting the high-street stalwart hard: its sales fell by 4.1% to pounds 2.63bn last year.

The company has warned that its profits are unlikely to increase for at least two years as it struggles to fight its corner against cheaper out-of-town supermarkets and online merchants.

With a long history of trying to offer something for everyone, in its current format the retailer will never be the cheapest, as it lacks the buying power of its supermarket rivals, nor will it attract specialist customers, because its wide product range lacks depth.

U-turns in its advertising strategy have not helped. In 2003, Woolworths ended a 17-year relationship with Bates UK and moved its ad account into Bartle Bogle Hegarty. The move came after Woolworths chairman Gerald Corbett criticised the Christmas 2001 campaign for failing to drive sales by focusing too much on stars - but now it has returned to celebrity endorsements for this year's Easter campaign, which featured X-Factor winner Shayne Ward.

Since BBH took over its advertising, Woolworths has been through three straplines. 'Let's have some fun' replaced the long-running 'Well worth it' line in 2003 to focus on celebrations, then two years later, the retailer reverted to a value focus with 'Prices worth celebrating'. Within a year, it again changed tack with this month's introduction of 'More great news from Woolworths'.

Such strategic shifts suggest that Woolworths' management is keen but confused about how to progress.

The retailer hopes to boost revenue through additional sales streams, developing an 'order at home and collect in-store' service and planning to revamp 14 of its 800 stores by the end of the year to offer internet ordering points. But this may not be enough to dampen speculation that Woolworths is ripe for takeover. Icelandic group Baugur recently added fuel to these rumours when it boosted its stake in the retailer.

We asked Chris Herd, executive director of Branded and former managing director of Bates UK, and Mark Brandis, managing director of specialist retail ad agency RPM3, what Woolworths needs to do in order to boost its fortunes.

DIAGNOSIS 1 - CHRIS HERD EXECUTIVE DIRECTOR, BRANDED

What exactly is the wonder of Woolies? To find out, let's play a little game. First, write down, in three words or fewer, who Woolworths is for. Now (in up to three words) write what it sells. Struggling?

In any queue in any branch of Woolies it would be possible to find a young kid buying sweets and toys, a teenager buying DVDs or video games, mum buying some candles for the lounge, grandad buying a DIY product - even dad on his lunch-break grabbing a quick 'designer' sandwich. …

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