Are WW & Coles Sly Agents of Aldi?
WW & Coles are chic, sophisticated efficient retailers – no argument… right?
They analyse return on store real estate, supplier efficiency, optimisation of promotions and deep dive into category workshops so they know more than national advertisers and international manufacturers about key categories.
Focussed on two variables
- Maximised return on shareholders funds, and
- Shopper satisfaction
WW and Coles may be reaching retailer nirvana…
Or are they building a road to disaster?
WW & Coles claim to be aiming for 30% of product to be house brands, own brands, or generics. In reality independent competitors believe up to 70% of Coles and WW shelves are no longer independent brands.
Their argument is that shoppers don’t mind… they just want ‘value’.
Fly Buys, Everyday rewards and “professional research findings’ are delivering the message that shoppers no longer demonstrate “loyalty’ to branded products.
OK, far too many weak, under-skilled FMCG companies have let brand equity dissipate, and deserve the resulting loss of audience loyalty and diminishing market share.
BUT, are Coles & WW just building a breeding ground for retail brand switching to Aldi?
Aren’t WW & Coles ’teaching’ shoppers to trust house & generic brands? Are not Coles & WW educating Australian consumers to find ample satisfaction by trusting the store, or the packaging, rather than the reputation and brand pride of a manufacturer?
20 years ago Aldi wouldn’t have found critical mass. The old Franklins proudly satisfied one third of the NSW grocery market by differentiating with a broader range of branded alternatives. What a shame that corporate arrogance and loss of leadership brought Franklins undone… but that’s history.
When FMCG possessed a passion for the science and depth of marketing strategy, brands BUILT retail chains, and consumers sneered disrespectfully at generics and copies of ‘real’ brands.
These days are gone. Coles and WW boast they are bringing ‘value’ to shoppers giving them exactly what they want in the form of private brands.
Coles and WW are “training” the Australian consumer to accept the Aldi model
So, while Coles & WW “train” the Australian consumer to accept the Aldi model, Aldi is quietly opening distribution centres, and doubling its stores, size and reach, efficiencies, marketing, and trade relations… having already won 10% of the eastern seaboard and looking for 20% national market share in the next 10 years.
Where will this come from? The shoppers WW & Coles have trained to look for ’value’ in house brands and lower prices!
Can Coles & WW Stop the Rise of Aldi?
Roger Corbett, on leaving the CEO role at WW said, “The biggest weakness for Woolworths is Corporate Arrogance.” If you try and help WW or Coles, their arrogant executives dismiss any suggestions that outside advisors could ‘possibly know better’. But they continue to employ ‘corporate profile’ that will follow the company line, and endorse “the emperor’s new clothes”.
Time will tell.
Meanwhile Aldi grows… with WW & Coles opening stores and ‘unsustainable’ growth rates… tactical actions in an environment that calls for blue ocean strategic assessment.
Let’s see what happens.