Woolworths kills off Homebrand0:30
Woolworths has ditched its long-running Homebrand label for the more up-market Essentials in a bid to improve perceptions of its private label range in the fight against Coles and Aldi.
Woolworths new private label phantom brands including Smitten and Apollo pet food, Herbal Sensations shampoo and Chevron batteries.
SUPERMARKET shopping just got a whole lot more confusing.
In the past, at the major retailers, you had a clear choice between big name branded products like Kellogg’s, Arnott’s and Coke, and the store’s own private label products, like Homebrand and Smart Buy, clearly labelled with the supermarket name.
But in the past three months Woolworths has introduced a new range of private label products with one big difference — gone is the Woolies branding.
On the shelves instead are names like Smitten and Apollo pet food, Chevron batteries and Little Ones nappies — a strategy similar to the one used by Aldi in their fight to grab customers from Coles and Woolworths.
Woolworths says the new range was developed following insights from customers and delivered “quality and value”. Some customers, they said, preferred not to have the retailer brand on the products they bought.
But marketing experts have warned the change from traditional home brand labelling could risk upsetting customers if they feel “tricked” into buying home brand.
Woolworths new private label phantom brands including Smitten and Apollo pet food, Herbal Sensations shampoo and Chevron batteriesSource:Supplied
Retail expert Gary Mortimer from the Queensland University of Technology said he noticed Woolworths has changed tactics in the supermarket wars when he spied a new brand on the shelf last month.
“I came across a pack of grated cheese with the ‘Hillview’ brand and saw it was very sharply (well) priced,” he told news.com.au. “And then I looked closer and realised it was from Woolworths.”
The retailer is trying new some new tactics in the bruising supermarket war. Picture: AFP/Peter ParksSource:AFP
As well as Hillview cheese, the list includes Baxters pet food, Softly fabric softener, and Olsent light globes.
In some cases, Woolies has even actively removed its own brand from existing products. Woolworths Select Herbal Sensations shampoo, for instance, has been redesigned to remove any reference to Woolies from the pack.
While products in the supermarket’s luxury Woolworths Gold range are now branded simply ‘Gold’.
The Woolworths Select Herbal Sensations product (right) has been redesigned with all traces of the Woolworths branding dropped (left).Source:Supplied
According to Woolworths online, a 700g pack of Woolworths’ Hillview shredded tasty cheese costs $5 compared to $6.29 for a smaller 500g pack of Woolworths’ Select cheese and $9 for a 750g pack of Coon shredded tasty.
Mr Mortimer said it was a change of tactic for Australia’s largest supermarket that previously has been quite open about its own products in store.
“What Woolworths appear to be doing with this range is what we refer to as phantom brands, that’s brand that aren’t really national brands but supermarket private labels disguised as a brand,” Mr Mortimer said.
The move comes as Woolies reinvents its business after being caught in a battle between a resurgent Coles and German chain Aldi, which is soon to expand into South Australia and WA.
Woolworths non branded ‘Gold’ Christmas foods.Source:Supplied
‘Woolworths Gold’ Christmas pudding has been redesigned to now simply be ‘Gold’ Christmas pudding.Source:Supplied
In August, Woolworths Group announced a full year $1.23 billion annual loss. While most of this related to writedowns in Big W and its failed Masters home improvement chain, earnings from supermarkets also slid.
Between March and December 2015, Australia’s largest supermarket saw its market share fall from 38.5 per cent to 37.3 per cent, according to Roy Morgan research, compared to a 41 per cent market share in 2008.
Since 2008, Aldi’s market share has risen from 5.5 per cent to 12 per cent overtaking IGA to become Australia’s third largest supermarket.
Coles market share has fluctuated by has risen recently to 32 per cent.
In June, Woolworths announced it would phase out its ‘Homebrand’ and mid tier ‘Select’ own brands with a new ‘Woolworths’ label as part of a plan by chief executive Brad Banducci to lift flagging sales.
But no mention was made of new phantom brands.
Aldi has long had phantom brands in its range including Goldenvale cereal and Blackstone chips, pictured above.Source:News Corp Australia
The new home brand products were aiming for a particular customer, said Mr Mortimer.
“For some consumers private labels carry a stigma of being cheap and nasty,” he said.
“So developing a phantom brand, with no connection to a retailer, provides consumers with a product that looks like a national brand but still at a great price.”
However, he predicted the phantom brands wouldn’t appear in every aisle. Rather, they would be created in categories — such as health and beauty, pet food and coffee — where shoppers demand quality.
Retail analyst and managing director of Marketing Focus, Barry Urquhart, told news.com.au around 12 per cent of customers were driven purely by price and had no qualms with Homebrand while 20 to 25 per cent bought only big brands.
That left a huge “grey area” supermarkets were trying to exploit with new private labels.
“It’s clearly a defensive strategy against Aldi and recognition of the innate weakness with the brand name Woolworths,” Mr Urquhart said.
Hillview is another of Woolworths new phantom brands.Source:Supplied
WILL THE PHANTOM BRANDS WORK?
Coles and Woolworths, he said, had led the way in generic products but their success had given a “free kick to Aldi” whose phantom private label brands were not only well-accepted but even desired by middle-income shoppers.
Woolworths’ phantom brands were fighting back against the popularity of Aldi on their own turf. But would it work?
“This could potentially be very successful but there will be very little latitude given to Woolworths so you can expect some counter moves by rivals.”
A Woolworths spokesman told news.com.au the new products had been introduced gradually from July and would be stocked alongside the more obvious private label products.
“Over the last year we sought insights from our customers as we looked to enhance our range of products. Woolworths branded and non-branded ranges reflect our commitment to quality and value,” he said.
The phantom brands were all identified as, “produced or packed for Woolworths on the mandatory product information” on the back of the back.
Only the small print on the back of the packet reveals the product is ‘Produced for Woolworths’.Source:Supplied
The supermarket said the dropping of the ‘Woolworths’ branding on it’s Gold range of Christmas food was because shoppers often gifted the product.
“Our branding on the latest range of Gold products better reflects how our customers choose to use and enjoy this range.”
Woolworths would not reveal how many more phantom brand they hoped to range.
Coles has also stocked some phantom brands, such as Drover’s Pride beef introduced in 2012. But a spokeswoman said the focus was now on the ‘Coles’ private label brand. “The new branding is simple, communicates very clearly to customers and is more identifiable as a Coles Brand product,” the spokeswoman said.
Mr Urqhart said Woolworths faced a challenge stocking both clear private label and phantom brands.
“If you get home and discover a product you bought was Woolworths after all, that causes confusion, annoyance and frustration,” he said.
Mr Mortimer agreed. “Shoppers at Aldi understand they have 98 per cent private label and it’s an Aldi brand.”
But Woolworths shoppers would not be as aware what products were home brand in disguise.
“A reasonable shopper picking up Hillview cheese will genuinely think it’s a branded product,” he said.
“So while it is a good strategy to grow your business where people are a bit sceptical of own brand there is that risk you will upset customers who may perceive they were tricked into buying private label.”
So if shoppers don’t want to buy supermarket own brands what should they do?
Mr Mortimer said there was only one answer. “In the future, turn it over and check the back of the label.”
