Monthly Archives: June 2015

How to get Woolworths back on track

Having worked in the grocery retail industry for a number of years, I’ve seen plenty of change and plenty of things stay just the same. The recent hype over Woolworths’ ongoing troubles, culminating with Grant O’Brien announcing he will stand down, has led me to a few conclusions.

Here’s my take on some of the things Woolworths supermarkets need to be doing :

1. Get your pricing sorted

Research by Woolworths and others shows they clearly have a problem with price perception; a perception that is based on fact.  In other words, shoppers think Woolies is expensive, and they are right.  This will be a longer-term project for their management, but they must get started right now on fixing their pricing and the perception will begin to fix itself over time.  This issue will continue to hurt them as a legacy of previous management decisions, but can only begin to correct when the pricing issue is addressed.

2. Stop competing on house brands

Trying to compete with Aldi on their own-brand products is an exercise in futility.  By all means have home brand and generic brand offerings in all relevant categories, but not at the expense of major brands.  Learn the lessons from overseas experience in this area.

3. Accept there is a role for the discountersDisplays 2 Go - Aldi Image

Recognise and accept there is a role for the discount retailer within the Australian supermarket landscape, and act like it.  Just try to keep their share to 15% rather than 40%!  There is no point trying to crush them out of existence, so never behave as if that’s your objective.

4. Accept the profit pool has shrunk

The days of fatter margins and reduced competition are over.  Accept it, re-align your forecasts and objectives, and don’t look back.  That includes constantly looking to suppliers to prop up your profits.

It’s a brave CEO who faces their shareholders and tells them the gravy days are gone and they need to re-think their expectations – that’s not how public companies work.  With a new CEO coming in it represents a good opportunity to do just that.

5. Don’t forget number one

When the shopper walks into one of your stores to see that the number one brand in a category has been removed from prime position and replaced with your own brand, what is that shopper supposed to think?  To who’s benefit is that move?  Never, ever forget who is most important in your business.Displays 2 Go - Consumer choice

6. Kick Aldi where it hurts

Focusing on Coles and Woolworths’ comparative strengths (ergo Aldi’s comparative weaknesses) gives competitive advantage:

–  Work in partnership with your vendors to deliver more value to the consumer.  They are the ones spending their own money on product development, advertising, innovation and general investment in their brands, so support them!

–  Woolworths and Coles should be able to deliver a far superior shopper experience, particularly at the checkout, by being better resourced generally.  Make this experience as positive as possible.  It’s the Aldi shopper who needs to queue for longer, bag their own items and pay a credit card surcharge.

–  Research says that most Aldi shoppers are doing a top-up shop at the Woolworths or Coles anyway, so the opportunity to impress is available every day.

 

Phil Hine is the General manager at Displays 2 Go Australia’s leading manufacturer of in-store demonstration and sampling equipment. With an outstanding range of products, a clear understanding of the marketplace and custom built designs that provide the perfect solutions to meet your needs, why not give us a call?

Call us now 1300 240 250

Will discounters like Aldi rule in Oz?

Displays 2 Go - Aldi Australian MapOver the past few years discounters like Aldi have had a major impact on the Australian grocery retail sector. The latest survey by UBS/AFGC estimated that Woolworths and Coles collectively lost more than $500m in sales to Aldi in the last financial year.  This precipitous decline in sales and profit is unlikely to abate without substantial change to the strategies these business employ.

So what can retailers do and what is their strategy?

Experts from the UK spoke at the recent Australian Food and Grocery Council’s annual executive conference, and explained that a price war can be avoided by taking lessons from successful retailers such as Britain’s Waitrose and Marks and Spencer. Both retailers are considered to be upmarket brands, and have defended their turf against the discount retailers by adopting tactics such as focusing on increasing their range of chilled semi-prepared meals, along with celebrity appearances, product demos and boosting in-store service levels.Displays 2 Go - M&S Ready Meals

Looking at the strategies for both Woolworths and Coles, it appears they have taken some of these tactics on board. Woolworths has already identified semi-prepared meals as a growth opportunity and we can expect to see them in stores from June this year.

Coles have taken a slightly different approach, and one that analysts UBS* believe is a more sustainable plan. They have shifted to a partial every day low pricing (EDLP) model which aims to improve price perception and reduce the reliance on promotions, which in turn should reduce cross-shopping.

Displays 2 Go - private labels

It is also believed that both retailers will reduce their range in the next 3 years, with Coles being the most aggressive; there is talk of cuts of up to 30% being planned in some categories. Woolworths have also hinted that they may look to launch a private label in the future, but have been warned against this by Mr Edward Garner from Kantar Worldpanel, stating that similar strategies had been abandoned in Britain.

One thing is for sure: Aldi is here to stay.  They have permanently changed the market, impacting both retailer and customer behaviour. Profits for the big two are under pressure, and the potential to squeeze suppliers further seems to have been exhausted. We believe the lessons learnt overseas can be applied in the Australian marketplace, and retailers need to continue to listen to experts and experiment with a number of strategies. It remains to be seen who will come out on top.

Displays 2 Go is Australia’s leading manufacturer of in-store demonstration and sampling equipment. We understand DISPLAY, and we’re enthusiastic about creating impactful and effective materials that promote your products at launch events and in the marketplace.

With an outstanding range of products, a clear understanding of the marketplace and custom built designs that provide the perfect solutions to meet your needs, isn’t it time you gave us a callCall us now 1300 240 250

* UBS/AFGC – Australian Supermarkets Global Research 28th May 15

Brand Ambassadors or Sales Generators?

Brand ambassadors have primarily been used for in-store sampling to increase brand awareness and drive sales but are they still important and has their role changed?

Displays 2 Go - In-store sampling
The Australian retail sector has seen changes over the past few years in both grocery and the non-grocery environments. This change is affecting how we engage with consumers and what they expect from their shopping experience. The team at Retail Safari has written a great article entitled “From Brand Ambassadors to Engagement Specialists”. Here are some key highlights:

Consumers are thriftier and smarter

With our fingers just a touch away from product information, consumers have higher-than-ever expectations, particularly from the in-store experience. Brand ambassadors are expected to be exceptionally knowledgeable about the product, offering honest, expert, face-to-face guidance, giving consumers the confidence to make the right purchase decision.

Competition is tougher

There are so many brands out in the marketplace today, the pathway has become very complex and cluttered. It is therefore essential that brands and retailers know when and where to engage the consumer along their purchase journey.

A shift in the balance of power to retailers

The combination of decreased consumer spending and and growth of online retailers has seen some staff reductions on the shop floor. This makes it more important that brands put their own ambassadors on the shop floor to engage, educate and ultimately close the sale.

A new model

In the FMCG channels, competition is tough and budgets are shrinking so there is a push for more sales through smart activations. A new model referred to as ‘Sales in Action’ is seeing some positive results. The main difference with this new model is that brand ambassadors not only create brand exposure and the opportunity to ‘try before you buy’ but they also get the sale. By moving away from the traditional low-key store activity, brand ambassadors are now becoming part of a lively shopping experience, which allows them to become tangible sales generators.Displays 2 Go - Nice and Natural
At Displays 2 Go we totally agree with what they say. Being one of the main providers of portable display equipment in Australia we have seen a large shift towards custom built stands for in-store sampling and experiential marketing. Clients are not just asking us for a product; they are asking us for a solution to enhance the shopper experience.

We are in the business of making you look good, so give us a call and let us help you out with the  perfect solution, on 1300 240 250.