Woolworths will target consumer goods categories like hair care with its new private label lines – but the supermarket chain’s branding will be tricky to spot.
These new products will be without “Woolworths” branding, reports news.com.au, with the only indication of their origin located in fine print on the back of the packet.
In June the retailer axed its “Select” range of private label products, choosing instead to introduce a new line of Woolworths-branded products.
At the time, a spokesperson told SmartCompany the new range would be “more competitive in the marketplace than Select”.
“This will become a food-focused brand (covering a couple of thousand products), Select currently covers both food and non-food products,” the spokesperson said.
However, the new private label offerings will cover significantly more than just food products, and will have their own “branded” names.
“Smitten” and “Apollo” pet foods are now on offer from Woolworths, along with “Herbal Sensations” hair care products.
The only indication these products are private label is the line “specially developed and produced for Woolworths” featured on the back of the products, reports news.com.au.
Retail expert at Queensland University of Technology Business School Gary Mortimer told SmartCompany that Woolworths is attempting to develop a brand which “indicates both quality and value to the shopper”.
“In the past, shoppers were easily able to identify private label products over branded products, and they were able to make decisions on quality and value,” Mortimer says.
“Private label brands featured reasonable quality and good value, where national labels typically had great quality and reasonable value.”
Mortimer believes Woolworths new lines will “sit in the middle” of the two label types with the intention of capturing certain types of products.
“For these products, the perception of quality comes from the nice packaging, and the perceptions of value are driven because a price is under the national average,” Mortimer says.
“It will capture the shopper that’s probably not satisfied with private label products. One who likes better quality products but also wants value.”
These “phantom brands” allow the retailer to target areas where private label goods would not typically succeed, like pet food and beauty products, Mortimer believes.
“This should capture a larger proportion of the market where private label doesn’t work, like pet food. People love their pets and want to give them quality products,” he says.
The Aldi effect
Mortimer believes there is an element of Woolworths attempting to emulate the success of German discount retailer Aldi, which offers a number of “phantom brand” products in stores.
“Aldi has a similar range of skincare products with a “branded” name that are very successful. They’re not called “Aldi face creams”, because if they were then no one would buy them,” Mortimer says.
The new range will also hope to drive brand loyalty, claims Mortimer.
“This move will effectively create a new range for Woolworths, and they’ll be hoping it builds brand loyalty,” he says.
Shoppers looking at the new range will likely not pick up on Woolworths’ fine print branding due to the “low involvement” of grocery shopping.
“Shoppers won’t look at the fine print. Grocery shopping is low involvement, habitual, and routine. They will only be looking at the brand and the price,” Mortimer says.
Price wars to end?
Recent announcements from both major supermarket chains have given insight into the future of the price wars.
Woolworths chief executive Brad Banducci told Fairfax the company felt “very comfortable where we are on price,” with more focus going into store refurbishments over further price cuts.
This is a contrast to a recent Coles announcement, where Wesfarmers chief executive Richard Goyder told Fairfax a price gap between it and Woolworths would continue to grow and the company would be “aggressive as ever”.
These announcements make sense for Mortimer, and he believes the move is a good one for Woolworths.
“Woolworths for 25 years has clearly articulated that they were the fresh food people, and people shopped there because of that,” he says.
“A move away from price would be good for Woolworths, it would differentiate themselves from Coles and its “Cheap Cheap” campaign.”
A Woolworths spokesperson told SmartCompany Banducci had been talking about the move since March.
“This transformation will take place over the next couple of years, with the introduction of the bulk of the new range over the next 12 months,” the spokesperson said.
“Over the last year we sought insights from our customers as we looked to enhance our range of products. We are proud to be able to develop more
innovative food offerings that will deliver quality, value and nutrition under the Woolworths brand. Woolworths branded and non-branded ranges reflect our commitment to quality and value.”
“All products developed for Woolworths customers are clearly identified in the product information with the Woolworths name. Woolworths ranges are leading Australia in providing information such as Health Star Rating, new Country of Origin information and no artificial additives. We are confident that all Woolworths own and exclusive brand products will continue to provide real peace of mind to customers.”
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