From today’s NZ Herald:
“As dust from a vicious legal battle settles, the supermarket industry has turned back to the real fight – earning a bigger share of consumer spending…
Tim Morris of Coriolis Research believes the Big Fresh concept died away because it lost its novelty. Like Disneyland, part of the attraction was scarcity. When stores cropped up nation-wide, the appeal became lost. Since 2000, four Big Fresh stores have gone leaving nine, which will be phased out within two years.
Progressive is undecided on whether it will discard the Woolworths or Foodtown brand. “It depends on location and what kind of store it is,” says van Arkel. “But we need to do some sort of rationalisation.”
But problems could arise wherever it turns. Woolworths has a high national profile but is slightly weaker in Auckland. On the flip side, Foodtown – New Zealand’s first supermarket – is strong in Auckland, weak elsewhere. But if a Foodtown replaced a Woolworths, “what would the Christchurches and Gores of this world think?” asks Morris.
“It’s something from Auckland. If they’d been shopping at Woolworths for 30 years, I don’t think they’d want an Auckland brand.”
Indeed, customer feedback will be the driving force behind any change. Focus groups and research company Colmar Brunton are advising the company, says van Arkel, “but it may be a process of evolution rather than revolution”. He concedes rejection of a nation-wide brand may result in Foodtown staying in Auckland, and Woolworths everywhere else.
Anyway, despite potential branding problems, the ultimate supermarket asset will always be location, says Morris, with price coming a close second. Consumers will pass one supermarket to go to another if the second is cheaper – sometimes. The rule of thumb, explains Morris, is that the second supermarket has to be at least 5 per cent cheaper before it entices the shopper.”