Archive for woolworths

Woah….an adman puts ethics ahead of self interest?

Posted in Marketing, advertising, ethics with tags , , , , , , , , on May 29, 2013 by marketingheart

When the big cheeses of the ad business get together to share their thoughts about a topic, whether the format be a conference or in the press, we’re talking new business. You get your name out there, you show how smart you are, you say some stuff that might resonate with a prospective client.

So it was that last year a bunch of well-fed geniuses and snake charmers were brought together by ad industry fanzine B&T to compare the marketing efforts of Australia’s supermarket duopoly players, Coles and Woolies.

Standing in judgement are six of adland’s “most illustrious creatives, brand experts and strategists”

  • Naked Communications founding partner Adam Ferrier
  • Co-founder of CumminsRoss, Sean Cummins
  • former ECD of BMF (and founder of TheDylanAgency), Dylan Taylor
  • Ex-FutureBrand MD Erminio Putignano
  • MD of McCann Melbourne, Simon Burrett
  • Managing partner at BMF, Stephen McArdle

Disappointingly if there were disagreeements or even punches thrown, the article didn’t mention it. Instead, what stopped me in my tracks was Sean Cummins’ response to the topic of Home Brands:

Cummins refused to attribute scores to either supermarket in this category on principle. “I am professionally and personally opposed to private label offerings. I find it a blight on manufacturers and brand builders everywhere that the IP and category knowledge is piggy-backed by supermarket chains,” he says. “Our market is too small to kill Brands in favour of generics.”

Did you get that? Cummins has principles … and he’s not afraid to use them. Even in front of his competitors. Even if it means he probably won’t get asked to pitch for any retail business where Home Brands are offered. I thought that was incredibly refreshing.  But wait, there’s more. He went on:

“It’s about jobs, it is about primary industry it is about maintaining standards. Naïve and moral I may be, but I hate this tension. It is not healthy.”

For what it’s worth Sean, I could not agree with you more. (That’s right Coles, you can leave me off the list, too!). And if I ever go client-side, I’ll call you in as a reward for what you’ve done.

And then I’ll explain patiently that having morals is not in fact a sign of naivety. It’s a sign of maturity and responsibility. Oh well, close enough is good enough!

By the way, our enlightened judges scored the supermarkets a draw. Maybe that’s not so surprising if the following earth-shattering customer insights from the head marketers of each supermarket formed the basis of their agencies’ briefs:

“Our customers want good honest food which is fresh, available and affordable”, says Mr marketing director of Coles. “We want our customers to trust us to deliver best quality food and the best value every time they visit one of our stores,” said Ms GM marketing at Woolworths.

Lucky they have ad agencies who come up with different  executions, otherwise nobody would have had anything to say at all!

PS this is the first blog I’ve ever started with a “Woah” and I promise it’ll be the last.

Dirty Deeds in aisle three? The funny business of supermarkets missionaries.

Posted in business, food, Marketing, advertising, ethics with tags , , , on March 25, 2013 by marketingheart

Back in 2007, Coles released a  booklet imposing what it called ethical business practices on its suppliers.

Although it drew some smirks since many vendors felt they had been unethically treated by Coles for years, the initiative seemed to have merit. In his introduction, CEO John Fletcher called it “a set of values and behaviours that provide a framework for how we do business.”

Coles-vs-Woolies_300

Illustration by B&T Magazine

Last weekend  Fairfax’s Business Day revealed how Coles used a labyrinth of corporate structures including a $10 company in the British Virgin Islands to buy a shopping centre in the upmarket Sydney suburb of Neutral Bay where arch rival Woolies has been turning over $75m pa as the tenant of some 18 years.

The story has now been widely reported and I’m struck that although some commentators have noted the almost absurd levels being reached in the supermarket war, few have discussed the ethical dimension of Coles’ actions.

The structure that  Coles used to pay $40 million for the property –  30% above market rates and probably a record price – was hardly business as usual. The Sydney Morning Herald explained that the company which made the purchase – Sino Ace Investment Pty Ltd – had been registered just days before by one Bernard Chiu* which it described as a wealthy Sydney lawyer, and is owned by a company of the same name set up in the British Virgin Islands tax haven – preventing Woolworths from knowing the identity of its new landlord.

The true identity of the owner as Coles was only uncovered by The Herald from internal board papers – don’t ask how it got them but from this and other Fairfax reports it’s clear Fairfax has a well-placed deep throat in Coles!

Similarly, the terms of the sale were equally mysterious. The Herald found records showing that Sino Ace Investment bought the property from Vanbridge Pty Ltd which had purchased it in 1992 for $12.7m. Vanbridge is owned by Phun Lim and six members of the Mok family who list their company address in Sydney’s Pitt Street but home addresses in Hong Kong. The relationship between Sino Ace Investment and Vanbridge is not known.

Who is that masked man?

If you thought there must be some winner here, perhaps its Bernard Chiu, the man who registered Sino Ace Investment. Four months after the Neutral Bay deal with Vanbridge, he listed  the ludicrously palatial 7 bedroom home shown above for $13 million.  Trading up perhaps?

I’d like to reveal more about this ‘prominent lawyer’, but unfortunately I can find almost nothing about him. Could he be behind Bernard Chiu Legal & Business Solutions, the trading name of  Bernard Hang Man Chiu … a sole trader entity with no website or other web presence whatsoever? Is he the Bernard Chiu listed on LinkedIn with absolutely no other information. Another approach: a Financial Review property feature says Chiu bought his house ‘through his Berneva Consultancy company in 2005 for $9 million’. Berneva Consultancy was registered as a company in 2005 (the year the house was purchased), only registered for GST in 2009 and has no web presence at all – not even yielding anything in  a Google search.

And that’s it. No legal history, no public addresses, no awards, no big business deals, no splashy donations no business activity apart from buying and selling a multi-million dollar property with its Teppanyaki bar and kitchen and its ‘porte-cochere’.  Who is the masked man behind this $40m property deal?

Extravagant corporate squabble or dishonest and unethical practice?

This is not the first time a war has erupted over leases. Woolworths evicted Coles from a centre in the Blue Mountains town of Katoomba in 2012 after buying the site in 2000. So perhaps this could be explained as tit for tat, a petty squabble between massive wallets, and the covert aspect simply  business strategy being kept secret from competitors in the normal way. Perhaps.

Whilst presumably legal, Cole’s structure was clearly designed to hide the true nature of the deal. In 2011 Michael D’Ascenzo Commissioner of Taxation wrote “Proper governance should ensure that large public companies do not use tax havens for concealment purposes… We are in fact seeing dealings by large business that may involve related companies in tax havens and we will be reviewing such arrangements.”

For me, not just does this deal transgress reasonable and acceptable business practices, there is something else besides: under the terms of Neutral Bay lease, Woolies has to show its landlord its sales data.

To supermarkets, data is everything. Recently I’ve been working with a major national retailer that actually runs its marketing at a profit. How? By selling customer sales data to its vendors. Data is gold.

Using a concealed and devious means to extract critical intelligence from your direct competitor seems only one step away from corporate espionage. This is not seeking a competitive advantage through fair means – this is going to any extent to win by fair means or foul. This is the corporation as psychopath, working that gray space between what society accepts and what it clearly outlaws, the space that a book tellingly entitled Hardball: Five Killer Strategies for Trouncing the Opposition, labelled  ‘so rich in possibilities.’

This tussle may be the tip of an iceberg. Woolworths recently floated a $1.5 billion property portfolio on the Australian Securities Exchange and some industry observers believe the Coles/Woolies fight will shift to property. The supermarket giants have been put on notice about their aggressive property strategies, with the ACCC looking into whether two recent proposed acquisitions by Woolworths in the ACT and NSW could ”substantially lessen competition” in the market.

Should we care about one chest-beating corporate slogging it out against another, dirty tricks or no? In recent years both Coles and Woolworths have moved beyond food into liquor hardware, pubs, pokies, petrol, clothes, loyalty cards and more.  How they behave has the potential to affect not just countless other businesses, but almost every Australian consumer in one way or another.

The Mission Position

With a warm avuncular purr, Coles’ website says its mission is “To give the people of Australia a shop they trust”. Parent company Wesfarmers punishes punctuation to promise it “adheres to four core values: integrity; openness; accountability; and boldness.” Woolworths simply simpers “We strive to be open, honest, fair and transparent in everything we do.”

For the record, Enron’s mission statement included “We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here.” Maybe Pulitzer Prize-winning author Dave Barry had it right when he said “A mission statement is a dense slab of words that a large organization produces when it needs to establish that its workers are not just sitting around downloading Internet porn”

Adopting the Mission Position on websites is easy. Shafting suppliers and the competition is at odds with such statements. Let the supermarket Missionaries be judged on their actions.

Aldi does the right thing. Coles? Woolies? Nope!

Posted in Uncategorized with tags , , , on October 19, 2012 by marketingheart

While the two big Australian supermarkets controversially profit from people’s gambling weaknessesImage through their extensive pokies ownership (Coles and Woolies together own more high-intensity pokie machines than the top 5 casinos in Last Vegas combined), Aldi is quietly taking another view of its role in society, introducing a free battery recycling program backed by PLanet Ark. (Would have been nice to see the battery manufacturers kick the can too!).

Kudos, and from a person with two kids, thank you – that bag of dead batteries was getting ridiculously big!

I hope this helps reduce the annual 300+ million common household batteries are thrown away with ordinary waste and 8,000 tonnes worth of household batteries end up in the landfill annually.

BTW Aldi has also been unafraid to take on the banks in the past.

http://www.youtube.com/watch?feature=player_embedded&v=pDVmKGdWGNI

 

‘Evil’ Woolworths confounds us by doing some…good

Posted in food, Marketing, advertising, ethics, sustainability with tags , , , on October 2, 2010 by marketingheart

Woolies touches so many businesses that stories about its heavy handed business dealing are rife, and there’s even an active facebook hater’s group for those who wish to vent. Primary producers are particularly huffy about the power of Coles and Woolies. Hell, even the graphic design comunity took some shots when the new brand was launched, suggesting (gasp) the logo aspired to Apple greatness..or ripped it off.
woolworths apple

(As an aside, a story broke late last year about three Woolies buyers getting the sack for paying too much to a particular parsnips producer and also giving him/her too much share of business. Head office quaintly denied any kickbacks, instead saying the buyers had simply been sacked for paying too much! Wonder how the primary producers felt when they read that!).

Anyway, it’s not all bad….Woolworths has been recognised as one of the 50 highest scoring global companies in the Carbon Disclosure Leadership Index (CDLI) for the second year in a row and was the second highest scoring retailer in the world. Only five Australian companies were listed in the CDLI this year.

In 2007, Woolies announced an overall target to cut carbon by 40 per cent by 2015 through a range of initiatives including the implementation of sustainable green store formats, transport and logistics improvements and the integration of detailed, systematic reporting. Woolworths created 1500 instore Eco Ambassadors to help with the push.

Sounds like good news to me…wonder if it got mentioned on that Facebook group.

Coles shows the way forward with Fairtrade expansion..Woolies on the nose

Posted in Marketing, advertising, ethics, Uncategorized with tags , , , , , , , , , , on May 10, 2010 by marketingheart

I ranted earlier here about how behind Australia is in taking on Fairtrade products both at retail and consumer levels.

So it’s great news to read at retailbiz.com.au that Coles supermarket has announced a expansion of its Fairtrade Certified product range, adding eight Fairtrade tea and coffee house brand products in stores this June.
Coles adds to fairtrade coffee range
The housebrand manager at Coles summed the decision up thus: “Our Fairtrade Certified tea and coffee products are benefiting growers in Tanzania, India, Ethiopia, Sumatra, Papua New Guinea and Peru. It’s been gratifying to see the impact that Fairtrade can have on families in these communities. Customers can buy Coles Fairtrade Certified products knowing that they are helping to deliver access to better healthcare and education for children in these regions, and better financial security for tea and coffee growers.”

There now that wasn’t too hard as it? Interesting to see the Fairtrade action in the house brand products, one wonders whether Coles would expend it commitment by providing better supply to terms to branded Fairtrade goods? That might be too much of a stretch! (PS And while we’re at it, can anybody tell me what kind of coffee the big chains use..Gloria Jeans, McCafe, Starbucks etc?)

Still this is a great move and Coles deserves kudos. A contrast in styles during a week when the scary-juggernaut-that-is-Woolworths has appalled its customers by imposing additional costs onto debit card users as reported in Inside Retailing.

Does anyone out there feel motivated to do a Fairtrade product comparative audit across different supermarket brands? I’d love to know the results.