A lot has been written about the lack of trust in Coles and Woolworths for “misleading” customers on price, but what is less spoken about is how this impacts discount ticket campaigns, such as Coles “Down, Down” and Woolworths “Prices Dropped”.
Casey Donovan knows a thing or two about being “down, down”. She won Australian Idol in its second season but her singing career didn’t quite hit the heights of Guy Sebastian or Shannon Noll, the inaugural top two.
Donovan took some time to rekindle her career and is now a roaring success and much loved entertainer who recently starred in the theatre hit & Juliet.
In 2017, Donovan was cast as the face of the Coles “Down, Down” advertising campaign. Her career has fluctuated from being the hottest ticket in town, to the cheapest, and back to the hottest.
The brand that she represented in those ads has gone from one of “trust” to one of “despair” after Australia’s supermarket giants have been hit with legal action for allegedly misleading shoppers over the price of hundreds of products.
It turns out that Coles and Woolworths inflated prices, according to the ACCC (see chart below for an example) of hundreds of products before, days later, reducing them in a price discount promo that is above the previous cost. This includes well known brands like Arnott’s Shapes, Band-Aids, Bega cheese, Cadbury chocolates, Coca-Cola, Colgate toothpaste and Whiskas cat food.
‘They’ve failed the pub test’
An ACCC report has said this misleads consumers, and that the current cost of living crisis is not a valid reason to justify these tactics.
One example is what Woolies did to Oreos. The good stuff, for Woolworths ended up being more than biscuit loving bargain hunters should stomach, the ACCC effectively pronounced.
B&T spoke to several experts to work out whether these tactics would damage the discount ticket campaigns that the big two supermarkets have spent years building up when discount supermarket chains like Franklins folded, and German newcomers like Aldi have emerged in their place.
Jeannie Marie Paterson, a law professor at the University of Melbourne, who has written a great piece about the scandal, said that the supermarkets have not done anything illegal, but their brand campaigns about discounts could take a hit.
“To squander that idea they have these good deals for consumers by this sort of tricky scheme of increasing and then reducing a price…seems to me that you’ve squandered both your trustworthiness, but also that ‘Down, Down’ brand,” she said.
“The marketing strategy where these products were ‘down, down’, but the pricing drop isn’t getting consumers what they thought they were getting is actually misleading.”
“If you take a pub test,” Paterson continues, “People think that you should have just said the price had gone up, instead of trying to convince us that we were getting some good deal.”
Campaign Edge executive creative director Dee Madigan reckons it could have an impact on the Coles and Woolies brands.
“The two main supermarkets have gotten away with behaving like corporate bastards because they were convenient for consumers. But cost of living pressures trump convenience,” she said.
“Coles and Woolies have always been perceived to be in lockstep. And that has meant very little difference in brand loyalty between the two. But their different responses to the findings have given Woolworths (who are not contesting the finding) an opportunity to separate their brand and to build on it by presenting a ‘we listened, we’re sorry and we will change.”
Trust in these brands are ‘significantly eroded’
TrinityP3 founder Darren Woolley welcomes the ACCC’s legal action against the supermarket duopoly but questions whether it will go beyond “price manipulation”.
“In a retail category where either quality/service or low price are the obvious positioning, this would have a major impact on the way retailers communicate their lower price propositions,” he said.
“We have been talking about a triple bottom line (people, profit and planet) for 30 years. It shouldn’t be something that exists in the Annual Report. We need to ensure it is part of the wider business model.”
Robyn Sefiani, the president and reputation counsel of public affairs consultancy, Sefiani, said she found the allegations of the supermarkets using illusory discounts as disappointing, particularly after a Four Corners investigation about the treatment of their suppliers.
“If the ACCC investigation proves this allegation to be true, consumer trust in these supermarket brands will be significantly eroded,” she said. “Whether consumers vote with their feet, or hope the regulator’s scrutiny will guarantee genuine discounts in future, is yet to be seen.”
Tracey Cain, the CEO of public affairs consultancy H/Advisors, said that because of the control Coles and Woolies has over the market – the duopoly have about two thirds of supermarket sales – the reputation damage may be limited, but it could also open the door to newcomers like Aldi and IGA.
“If the ACCC wins and this becomes a political debate, then I believe both Woolworths and Coles will suffer a significant loss of confidence in their pricing models with ongoing regulatory intervention. They will need to reposition their consumer facing brand, and significantly change their advertising spin in order to win back trust,” she said.
“Coming at the same time as other inquiries with criticism of how Woolworths and Coles also treat suppliers, this could be a boost for the newcomers to the Australian marketplace. They have an opportunity here to run ahead of the ACCC action and to position themselves as different, more trustworthy, and as better citizens for Australian farmers and consumers.”
Everyone speaking to B&T remain sceptical the latest supermarket scandal will have a lasting impact on their brands because Aussies have little choice. But their efforts to promote “down, down” and “prices dropped” tickets may not receive the sort of comeback that Casey Donovan achieved, and if they do, it may take longer than Australian Idol’s comeback queen.
