Coles and Woolworths Copy-Cat Competition

by Marketing Lowdown on July 28, 2011

Last night, I was part of the studio audience for the ABC advertising show, ‘The Gruen Transfer’. Now into its 4th season, the advertising show critiques ads by the likes of Todd Sampson, renowned for his qwerky t-shirts and Russel Howcroft, an advertiser who isn’t afraid to express his opinions. And tonight was no exception!

The first episode focused on the price wars between Australia’s two major retailers Coles and Woolworths, as well as the carbon tax ad which I’ll leave for someone more “in the know” to critique. The host and comedian, Will Anderson did well to manage the heated discussion. The Coles “Down Down” ad was scrutinised to the nth degree. The infamous red hand, jolly happy Coles staff who resembled a Good Guys commercial were described as annoying, outdated and over-the-top. But the marketing strategy proved to have higher hopes. Todd revealed how sales had spiked as soon as the TVC was launched, due to the Coles positioning of delivering good value, more than just lower prices. On the other hand, the Woolworths “That’s my Woolies” ad, was described as ingenuine, unbelievable and a copy-cat of Coles’ commercial. The use of “Woolies” was an attempt to signal to consumers that the retail giant is a friend you call by its nickname. Comparatively, Woolies targeted those loyal consumers by thanking them for their continual shopping behaviour. But how many Australian consumers were “loyal”? Again, Todd was quick to point out that only roughly 1/10 shoppers who visited Woolworths would not consider visiting Coles, i.e. a very small proportion. Then off-air, Coles sponsorship of Masterchef was compared to Woolworths brand amabassador chef, Maragaret Fulltin and how both retailers continue to copy each other’s strategies.

So what does this all mean for us as consumers and for FMCGs who continually feel the pressure to meet Coles and Woolworths demands? For consumers, it’s obvious that the two major players who make up roughly 70% of the market, are cutting prices in effort to outbid the other. The reduced cost on necessities is ideal, especially with the current cost of living fears spurred on by the government’s up-in-air Carbon Tax. But in the eyes of the FMCG, the main objective to reduce prices where possible means that margins and brand equity are threatened. The big question still yet to be confirmed, is what will happen when Down Down and Knock Down promotions are over? Are the EDLP (everyday low prices) reduced for good? This is still yet to be known.

Undoubtedly, the red finger and green punching glove have caused quite a stir amongst consumers. I will be thrilled when Coles and Woolworths decide to compete away price and use innovative strategies that hold long-term appeal and value such as the Woolworths “Fresh Food People” campaign in 1987 which still holds true to today. I think the retail giants should rely less on their advertising agencies to shape their positioning and look inside their business to see how exactly they can create a strong strategic competitive advantage. As Commbank would say, Dare to be Different Coles and Woolies!

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Written by: Natalie Waser (Marketing Industry Specialist here at Marketing Lowdown!)

Natalie is engrossed by marketing at all levels – from critiquing television ads, to assessing in-store promotions to debating PR stunts.

Before commencing her Marketing Graduate role with Kimberly-Clark, the fast moving consumer goods company who invented Kleenex and Huggies brands, she completed various internships in PR, digital media and market research. She is driven by her imagination to test marketing norms and create new brand experiences.

On Marketing Lowdown, Natalie reflects on her experience as a marketing grad to bring you helpful tips to make your transition from university student to full-time worker all that little bit easier.

University: University of Sydney, Sydney
Degree: Bachelor of Economics and Social Science (Marketing and Industrial Relations and Human Resources)
Graduated: April 2011
Works as: Consumer Marketing Graduate at Kimberly-Clark Australia
Can be found on: LinkedIn

You can also read about Natalie on our ‘Meet the Team’ page!

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