In-country experts weigh in on the popularity of brand behemoths Woolworths, Coles and Qantas, and assess whether challenger brands like Aldi are encroaching on their bright futures.
Campaign Asia-Pacific’s Asia’s Top 1000 Brands survey for 2018 research points to Woolworths, Qantas and Coles as the most popular local brands in Australia. We asked five in-markets experts for their opinions on why these brands resonate, and what challengers they may face.
What’s behind these brands’ appeal to local people, and what are they doing that other local brands, or brands from elsewhere, are not doing?
Andrew Burke, MD of Outbrain:
Consumers in Australia care about price points and quality, but they are also concerned about broader issues. A considerable proportion of consumers here believe that businesses have a responsibility to behave ethically in the way they impact the community and the environment, and they desire to engage only with those that do so.
Both Woolworths and Coles have done well in paying attention to where their food comes from (sustainable sourcing), and what happens to surplus food (food waste). You might have heard about their latest pledge to ensure that all product packaging is recyclable by 2020, which is a huge step up from previous commitments to ditch single-use plastic bags.
We also see this cause-driven approach happening with Qantas, a brand that continually ranks as one of the most desirable places to work for reasons such as a healthy work-life balance, and real opportunities for career development.
In order to get ahead, brands have to go beyond simply proving that their product and service offerings are a cut above the rest. So long as brands—regardless of whether they are local or global—have their ear on the ground, are aware of consumer sentiment in all forms, and use these insights to inform business decisions, they will be able to future proof their brand success.
Dan Monheit, director of strategy at Hardhat Digital:
Woolworths, Qantas and Coles share a number of things in common that contributes enormously to their popularity. Almost every Australian grew up with each of these brands being the dominant player or players in their category and they have remained so for all their lives. Coles was founded over 100 years ago in 1914, Woolworths (in Australia) just 10 years later in 1924, with Qantas being our National Carrier since 1920.
In food retailing, Coles and Woolworths hold about 70% of the market, dominating the category that is most frequently visited. They have kept up-to-date with their online presence and home delivery in addition to their commitment to Australian society, charities, and providing quality produce and quality brands at competitive prices.
As successful as Coles and Woolworths are, with 800 to 1000 stores each, their share is not invulnerable. Aldi, in the relatively short period since 2001, has grown to 500 stores and is still growing, with between 10% and 15% market share.
Qantas carries the pride of the country with its heart-warming communications that reminded Australians for years that “We Still Call Australia Home” and is now “The Spirit of Australia”. It’s a brand which makes Australians proud to be Australian. In the past it had some local competition from Ansett, now defunct and its nearest competitor, Virgin Australia, is clearly not Australian at heart. Qantas holds 65% of the domestic market and also has kept pace with the times with its online presence, loyalty programs and budget offering in Jetstar.
Unless a massive increase in landing gates or airports happens, this ability to obtain real-estate is not likely to come quickly in the airline industry, meaning Qantas is unlikely to be seriously challenged in the foreseeable future.
Russ Mitchinson, head of strategy, ANZ at Essence:
These brands do an excellent job of tapping into the hopes, desires and needs of the Australian people. They understand what motivates us as a nation and engage with Australian passion points with consistent execution over time. For example, Woolworths has been known as ‘the fresh food people’ for many years, understanding this is a constant motivator to visit the stores for all Aussies.
Qantas, meanwhile, has tapped into the ‘Spirit of Australia’ for decades, a sentiment which is now delivered in a digitally savvy and inspiring way. Additionally, Coles understands the populist power of supporting local producers with a persistent focus on everyday value for Australian families.
These brands haven’t changed the brand message and have stayed true to what lies at their core. They all embrace big, populist pieces of digital video, supported by a strong social presence. This is text-book creation and maintenance of a brand.
Tim Riches, group strategy director at Principals:
Woolworths and Coles, as Australia’s local supermarket duopoly, are huge brands with massive footprints and consumer impressions; an inevitable part of daily life for most Australians. But I’m surprised to see them as popular and appealing in this study. Australians have little love at the moment for big incumbent brands who are often seen as exploiting their market power to the detriment of households under financial pressure. So although the rivalry between the two big players is extremely visible—as each invests in new store formats, price cuts, TV show tie-ups and ad campaigns—neither has established clear differentiation from the other or a compelling basis for consumer connection.
Qantas, that’s an easy one. One of the few big brands lots of Australians feel proud of, despite our “tall poppy” syndrome. They’re associated with something most people love—travel. They have a nice (if soppy) ad campaign. And they’re back making money.
Do you see these brands’ future as under threat from encroaching global or non-local players?
Craig Flanders, CEO of Spinach:
As a business that spends a lot of time looking at what consumer-centric insights are hidden away in data, these three brands have three of the biggest and most powerful loyalty schemes in the country. I wonder if this is part of the reason why they resonate so well. Any local industry leader is in danger of being upset by overseas brands. Obviously the big two supermarkets—Coles and Woolworths—are under threat from Aldi (now the number three player in the country). But also other overseas brands such as Kaufland entering the physical store market, as well as the behemoth that is Amazon—we’ve only seen the tip of this iceberg locally.
As we’ve seen in many categories from automotive to retail, supermarkets and airlines, the Australian market is big enough to get many international players interested but it’s not big enough to support them all. There are always winners and losers. The question in the retail space is will Australia take to Amazon like the US where it seems to be ubiquitous, or be more like the UK where it hasn’t had as much impact on the high street?
I’d also posit that the supermarket landscape in Australia may end up in a similar place to our automotive market, with two major players and a few more minor players fighting over the crumbs. But the current leading brands get complacent at their peril. While the structure of the market may change little, the pecking order of brands can change, even if it takes a generation. Just ask Ford and Holden.
The brand that is giving these Woolworths and Coles a run for their money is Aldi, which is much better at creating brand loyalists and advocates by presenting itself as “Different in a Good Way”—despite the fact that it’s an order of magnitude smaller. Aldi is a challenger brand that builds everyday low price believability into its business model, surprises and delights in the in-store experience with unexpected products, and most importantly enables its customers to feel smart by not choosing to shop with the big guys. Rather than aiming for the mainstream, Aldi taps into a value-savvy and slightly anti-establishment mindset that is highly culturally relevant.
These brands are absolutely under threat from non-local players. They need to constantly stay relevant to Australians by finding new and fresh ways to engage these national passion points while ensuring they are truly consumer-centric. You only have to look at the success of Aldi in the Australian market to see there is room for other players to enter and successfully challenge these long-established brands.
For Qantas, there is also the rise of Virgin Australia and smaller, nimbler value players to contend with.
Where these brands don’t stay ruthlessly relevant to their consumer through innovative products, service, media and messaging, there is room for more responsive and reactive competitors to take profit off the table. Popularity in Australia comes at the price of constant and relevant innovation.
Full article written by Babar Khan Javed.