That was the wonder of Woolworths

  • The administrator’s announcement of the closure of all 807 Woolworths’ stores shows that no value could be realised from the business as a going concern. The question remains whether there is any value in the brand and if anybody will be willing to pay a price for it.

    In our brand value blog last month we argued the worth of the Ryanair brand and made the case for significant value by using the metrics of awareness; understanding; preference and stretch: this despite the airlines apparent unpopularity with many.

    When applied to Woolworths we get a very different result and some important pointers.

    Woolworths is a highly visible brand. Brand awareness is invariably a positive attribute as it drives business through the comfort of familiarity and apathy in the search process. Somebody should be able to put this awareness to positive use.

    Understanding is where the Woolworths’ brand starts to unravel. People lost sight of what Woolworths was and stood for. The shops were confused, a hotchpotch of crammed aisles offering everything from pick-n-mix sweets to garden furniture. The unifying element was price and when cost leadership is your sole basis of competition, there is only one direction for those prices to go - down. A major re-positioning exercise would be required by any acquirer.

    There was a time when Woolworths was a natural choice for many, offering as it did an Aladdin’s cave of goods, conveniently located at fair prices.

    In its dying days there was nothing the stores offered that couldn’t be acquired in a more satisfying way elsewhere. There was no positive reason to choose Woolworths other than it was there. Any benefit of convenience was rapidly eroded by the shift to out-of-town locations and the Internet.

    To stretch the brand into new markets would require getting the preceding factors right, something that proved beyond the ability of the previous management. A new management team, however able, would surely ask itself, why it should invest in a broken brand for a new market when it can focus its resources on building something new.

    So, any value beyond the awareness seems to have been destroyed. What lessons are available from this demise?

    Woolworths started as one of the original penny bazaars when such things were seen as a marvel of commerce. But times change and Woolworths didn’t. As we warned our children away from the excesses of sugar and the music industry switched to downloads, Woolworths stubbornly kept its front of house offer as sweets and CD’s. If the strategy was for high-spending parents to be dragged in by low-spending children, it clearly didn’t work.

    The brand lacked any clarity in its basis of competition. There are essentially three choices: focus, differentiation and cost leadership. Woolworths had no focus, try as it did to offer all things to all people. There was no point of difference and cost leadership is only sustainable by the market leader and there can’t be a leader in an undefined market.

    The greatest tragedy of all was that Woolworths stopped caring for itself. In the final years, the stores were a mess and the staff totally disengaged. Woolworths went from having a great brand to no brand at all in less than 10 years because it lost sight of what it had and failed to evolve a new space for itself in a changing market. A brand is defined by passion and loyalty and seemingly the staff noticed the problems before the management. If there is no passion and loyalty in your staff then you can hardly expect it of your customers.

    A brand that falls out of love with itself is no longer a brand at all.

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