Is Woolworths rebrand a failure to launch?

Two weeks after Australian supermarket giant Woolworths launched a fresh new look, the old logo is still being prominently featured in both advertising and the launch of its new credit card.

One of the best ways to kill the momentum of a rebrand is to execute poorly and hesitantly - and Woolworths seems to be on a similar track.

At launch Woolworths promised that the rebrand would take place slowly and steadily and that only a small number of stores would be rebranded with the new look and the rest would come on stream as they joined a refurbishment program or new stores were opened.

However, since the launch Woolworths seems to be exhibiting all the hallmarks of poor brand management.

On August 22, Woolworths announced the launch of a general all purpose, all singing and dancing credit card that can be used for purchases both within and outside Woolworths outlets and at group stores such as Dick Smith, Dan Murphys and Big W.

While a joint venture with global banking group HSBC and Mastercard, the Everyday Moneycard proudly carries the Mastercard mark but also the OLD Woolworths logo as does the Woolworths website, where you sign up for the card and the in-store and other advertising for the card.

And no one seems to have told Woolworths' advertising and media agencies. A similar story was repeated in newspaper and television advertising - the old logo continues to blaze in full colour.

None of this seems to make sense when in the same week Woolworths shrugged off the ACCC report into supermarket competition and announced the fresh new look would, as its head of marketing Luke Dunkerley is quoted as saying, "be instantly recognisable as Woolworths and be associated with the word fresh within a short time".

Here at DIFFUSION we wonder what Woolworths thinks is a "short time" and whether perhaps the flurry of announcements were designed to draw interest away from some of the more adverse findings in ACCC's supermarket competition report released on August 5.

More importantly, it demonstrates that large scale rebranding projects such as this are critical to Woolworths' long term strategy and require far more than a marketing department's control. A concentrated and well executed timetable, that is both realistic and cost effective, would forestall the impression that this is a hamfisted exercise. We wondering whether Woolworths' CEO Michael Luscombe isn't about to repeat some of the disasters from competitor Coles' rebranding efforts, which resulted in successive profit write downs from the botched Bi-Lo merger and John Fletcher's downfall.

Woolworth's Thomas Dux challenges Coles.

Woolworths is set to add to Wesfarmers' supermarket woes with the first of its new Thomas Dux branded stores opening in Sydney.

With another store already earmarked for an August opening in Sydney's Paddington, Woolworths says the stores will concentrate on offering mainly fresh foods and a larger deli in smaller format supermarkets under the new brand. Some of the brands to be included in the new store include one's already stocked at Woolworths' deli counters as well as new ones such as Simon Johnson.

In a local release, Thomas Dux Grocer is described as "a bunch of people passionate about food" who care about "what you care about" and aim to make the food shopping experience "so much better." It's going to be prove challenging as no supermarket brand in Australia seems to be able to do this with all relying on similar strategies to maintain market dominance, yet with none with a particularly differentiating brand strategy.

The move marks a new chapter in the attempt by both Woolworths and Coles to capture what is an increasingly savvy grocery customer and replicates similar IGA formats in Victoria and Queensland.

The look and feel of Thomas Dux (retro name and logo) is very much in line with similar format stores in London for small grocers such as Shepherd Foods and Partridges, and the reliance of fresh and specialist lines for stores replicates similar strategies used by US organic grocer, Wholefoods.

Both Coles and Woolworths look to be under threat by changes announced last week by the Australian Federal Government which will see the market set opened up to international competition. Already US big box superbrand Costco is set to open in Victoria later this year.

Coles is increasingly seen to be on the backfoot in its battle to maintain the Australian supermarket duopoly (Australia is one of the world's most lucrative supermarket battlegrounds deliverying higher than world average margins).

While Coles is currently undertaking a major review of both its media and advertising buying and strategy under new CEO Ian McLeod, no new brand strategy has been revealed. It was the absence of a coherent strategy that so successfully undermined John Fletcher's tenure in the role.

Coles breakup signals strategy failure.

Putting paid to his much vaunted big-box brand strategy, Coles Group Chairman Rick Allert announced today the troubled retail giant will be split and expressions of interest sought.

Despite a number 30 ranking in the global retailing stakes, Allert and CEO John Fletcher seems to have cast aside the dubious brand work of both McCann Erickson and Futurebrand and has told investors and the market that it was inviting expressions of interest for 100% ownership of the group including what they call the Everyday Needs Business (Coles Supermarkets and Kmart), Target and/or Officeworks. He also said the Group would also consider the sale of a considerable stake in the Everyday Needs Business as well as a demerger of both of Target and OfficeWorks.

Here at DIFFUSION we've been a long time critic of the group's less than comprehensible brand strategy, with Allert and Fletcher being consistently wrong footed by Woolworths. Just over three years ago Fletcher had the opportunity to set things right but even then he was saying his organisation didn't need one. It's about time other similar companies (we have a list!) woke up to the need for CEO-led wholistic brand strategy not run by their marketing departments or their advertising agencies.

Coles failure is a patent example of such strategy absence.