Woolworths private label goods to get a makeover

Posted by Daniel Palmer on 14th April 2009

The private label products of Australia’s largest supermarket operator are set to undergo a major facelift, according to a report on the weekend.

Woolworths will work with Hulsbosch Strategy & Design to redesign some of its private label product lines in one of the biggest design briefs to be handed out this year, The Australian reported.

The design company, which worked with Woolworths to create their new logo last year, is expected to focus on updating two brands within their private label range – Home Brand and Select.

Home Brand, which was first introduced in the 80s, is the retailer’s cut-priced budget option, while Select is targeted as a ‘brand-quality’ alternative that is priced more attractively than national brands. Their other private label products, Naytura, Freefrom and Organics, are not expected to receive a makeover given their more recent entry to the marketplace.

Woolworths’ decision to consider a redesign is not surprising given the growth of private label products in the current economic environment. The challenging market conditions have forced many consumers to focus more intently on reducing their expenditure and private label has been a major beneficiary. As a result, Coles, Woolworths and IGA have all outlined plans to extend their private label ranges.

When reporting their half-year sales results, Woolworths noted that their “private label penetration (was) well below international levels”, with expansion of their ranges set to continue given private label sales growth outpacing that of national brands.

The strategies of Coles and Woolworths with regard to private label have previously been questioned by private label grocery leader Aldi, whose range includes about 95 per cent private label.

Michael Kloeters, Managing Director of Aldi Australia, has previously said that the major retailers’ focus on a tiered strategy creates negative connotations for their basic range as it implies inferior quality. There are also arguments that it could damage their higher priced line/s as the perception of the basic good may remain front-of-mind when considering a purchase of their more premium brands. Unlike Woolworths and Coles, Aldi’s name does not appear on the front of their private label ranges, meaning that consumers unaware of their private label commitment would have to look closely at the back of the packaging to discover that the brand is owned by Aldi.