Woolworths has revealed plans to axe its ‘Select’ private label product line, as the supermarket giant attempts to increase its food and liquor sales by four percent.
Chief executive Brad Banducci confirmed the cancellation of the ‘Select’ line at a meeting of analysts last Friday, according to Fairfax.
At the meeting Banducci revealed Woolworths’ target to increase food and liquor sales by four percent, and volumes by two percent.
The retail giant will consolidate its private label brands into a new ‘Woolworths’ label in an attempt to achieve this goal.
The Select brand was established in 2005 as an alternative to the company’s ‘Homebrand’ private label brand, aiming to offer lower prices on over 1000 different common products.
Despite seeing growth from 2006 to 2012, the brand has recently been in decline.
The cancellation of the ‘Select’ product line comes just months after the axing of Woolworths’ 30-year-old Homebrand label in March, with the familiar red and white packaging replaced with the company’s ‘Essentials’ range.
A Woolworths spokesperson told SmartCompany this morning the new ‘Woolworths’ branded private label range will 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 says.
“The Woolworths label will allow us to offer our customers fresh produce and food products that are more consistent in their promise and delivery.”
The rise of Aldi and private label “price wars”
Recent competition from grocery giants Aldi and Coles has contributed to Woolworths private label demise, according to one consumer marketing expert.
According to Fairfax, Woolworths conducted a review its private labels in 2015, after it was found customers preferred Aldi’s private label brands.
At the time of review, Aldi’s private label brands were 27% cheaper than Woolworth’s ‘Select’ range.
Teresa Davis, a consumer marketing expert and associate professor at the University of Sydney Business School, told SmartCompany maintaining private labels is an “unsustainable war” for the major supermarket chains in Australia.
Davis believes the continued growth of Aldi is the reason for private label “price wars” between Woolworths and Coles, and says consumers can no longer see a difference between the two majors.
“Aldi has positioned its brands as being of consistent quality at a great price,” Davis says.
“From a low advertising spend new entrant to a serious player, it now has a marketing strategy and spend that shows much more agility and consumer responsiveness than the big duopoly.”
With Davis describing both Woolworths and Coles as “floundering”, she says future competition in the grocery sector will likely switch to different arenas.
“Price and quality issues are rife in the private labels, I think it’s going to move into different arenas,” Davis says.
Davis says recent moves by both Woolworths and Coles are “no more than a defensive strategy”.
“Unfortunately for them Aldi is the new player with agile moves and a clear targeting strategy,” she says.