For as long as most shoppers can remember, there’s been two major supermarkets: Coles and Woolworths. Then German disruptor ALDI – and to a lesser extent local store IGA – came along and spiced up the offering, giving customers a lot to think about when it comes to buying groceries. And it seems this sentiment has extended to their advertising.
Over the years, Coles and Woolies have stripped back their advertising spend to cut costs, while ALDI has upped its marketing budget in a bid to win over disenchanted and budget shoppers.
Back in May, it was revealed the both Coles and Woolies had slashed their marketing dollars in the 12 months to April 2016, to $48 million and $74 million, respectively, after first chopping their ad spend by as much as 25 per cent the year before. ALDI, on the other hand, practically doubled its spend, upping its budget first to $28.9 million, then $34.7 million this year.
When ALDI first stuck its flag in Aussie land 15 years ago, it had a strict policy of not spending on telly advertising, but around four years back, ALDI threw caution to the wind and kicked off its quirky ad campaigns including ‘Like Brands. Only Cheaper’, with all kinds of humorous characters.
The ad campaigns are developed in conjunction with creative agency BMF, which has been working with ALDI for 12 years, on projects like the Supermarket Switch or The Unconvincibles, which appeal to real life customers who’ve previously sworn loyalty to Coles or Woolies.
“For too long, the ‘Colesworth’ duopoly allowed the two majors to thrive without needing to really engage the Australian public through their advertising. Shoppers physically visit and transact with supermarket brands a few times a week – that ongoing habitual behaviour forms a pretty strong connection, irrespective of the quality of advertising,” BMF’s head of planning Hugh Munro told B&T.
As an outsider to these players, Munro could only speculate why the ‘creative spark’ in supermarket advertising has gone out.
“Maybe the two majors play copycat because they’ve only been focused on each other. Maybe they’ve just had a comfortable duopoly for so long, they’re not ‘match fit’ to compete with challengers.
“Or maybe it’s a deliberate strategy that has worked well for years. A lack of distinctiveness helps preserve default shopper behaviours. If people don’t think too hard about their brand preference, they’re more likely to shop wherever’s closest, and it becomes a war of real estate.”
Mollie Hill, planning director at The Monkeys, the agency for IGA, tends to agree, suggesting the supermarket category is guilty of fighting to see who can shout the loudest, rather than who has the best chant.
Australian supermarkets have more promotional offers than the rest of the world, with 40 per cent of purchases bought on promotion, ahead of the US (37 per cent), UK (34 per cent) and Germany (16 per cent), a trend Hill says risks underestimating the intelligence of the customer.
“More and more we see Aussie shoppers choosing alternatives to the big corporates and also changing the way that they shop, from the big weekly to buying as they need.
“IGA Supermarkets are independently run businesses owned and operated by local people. Each store is tailored to reflect the distinctiveness of the local community it serves.
And it’s this approach that Hill says gives the little guys more than just a fighting chance when stacked up against the big guns.
“To win, brands must stand for something meaningful and offer shoppers a valuable difference and experience – because everything else can be replicated elsewhere,” she said.
“In the last year alone, we have committed to a ‘Price Match Promise’ to reassure customers that shopping independent doesn’t need to cost them more – and we’ve delivered this in an authentic, Aussie tone of voice, led by much loved Aussie larrikin Shane Jacobson. We’ve also created campaigns to promote the unique local flavour of individual IGAs to reinforce the other benefits of shopping independent.”
And it’s in these times, when both giants – Woolies in particular – are looking down the barrel of more troublesome times, from cutting jobs and closing stores, to losing the crown of most valuable brand, that advertising is crucial.
The big supermarkets have become dictated by price wars; Coles adopting a persistent ‘down, down’ message and Woolies a similarly repetitive, ‘cheap, cheap’ motto. ALDI, too, has followed suit with its ‘Like Brands. Only Cheaper’ slogan, however with more humorous tactics.
What arises, then, is a question of creativity and wit, and more importantly, where has it gone? M&C Saatchi snagged the Woolworths account from Leo Burnett’s in February, taking a fresh take on the supermarket chain in new ads, with the catch phrase, ‘That’s why I pick Woolies’. B&T was unable, however, to secure comment from the agency on the future direction of Woolworths’ marketing.
And yet it appears all bad news for Woolworths. Not only is it losing share to ALDI, but as the merchant bank UBS report notes, its customers are also off to IGA too.
“Coles is doing the best job competing against ALDI, and we expect it to be least impacted over the next three years,” the report’s authors noted.
“Australians are world-class at sniffing out BS. Few brands get away with acting different unless there’s something substantially different about what they do,” Munro added.
“Coles and Woolworths have more to lose than they have to gain. Ten years ago, the two majors took around 80 per cent of all grocery dollars. There’s not much upside from there, and you’d naturally take a defensive stance.
“But the counter-intuitive thing about loss aversion is that it tends to become even more intense as you start to lose. So even though Coles and Woolworths only take around 70 per cent of grocery dollars today, they’re as defensive as ever. This has been reflected in a strategy that aims at protecting market share through price discounting rather than building a long-term brand connection.”
Munro thinks Woolworths’ latest campaign hints at the store playing a role in local communities, with the idea behind the Fresh Food People being to humanise one of Australia’s biggest corporate machines.
“But in an age of transparency, your talk needs to reflect your actions. Suppliers should always be treated with respect, and now they have a bigger voice than ever before. Just last Christmas, GetUp called out Woolworths with a spoof ad for ‘The Pokies People’.
“ALDI’s Supermarket Switch has been running for three years now, and the latest version – The Unconvincibles – is the most daring version of the campaign yet. With more Australians than ever shopping at ALDI, we sought out shoppers with the most stubborn, ingrained, negative view of ALDI, and made them the stars of our advertising. It’s an approach that we’re confident our competitors would never dare copy.
“Actually, not just our close competitors: few brands would allow themselves to be that exposed and raw. We’re very proud and fortunate enough to have a client that is brave enough to go there. And reap the rewards.”