Australian retail giant Woolworths has taken the extraordinary step of dumping its three-decade-old “Homebrand” to intensify the grocery war. Accordingly, all the erstwhile Homebrand products will be bundled under its “Essentials” brand.
“Part of this review will see our current value ranges, Homebrand and Essentials, consolidated into one improved value range called Essentials,” Woolworths said in a statement.
The process of repackaging Homebrand products under Essentials has been described as a means to boost quality and ward off a perception problem.
Although Home brands prices are cheaper than those at Aldi and Coles, the perception remains that Homebrand products are inferior to other chains, reports The Sydney Morning Herald.
In the last 10 months, Woolworths has been working to reduce the price gap between Homebrand and mid-market Select to catch up with Aldi. Woolworths has already pumped $600 million to reduce its grocery prices.
Launched in 1983, Homebrand had been a leading private label in Australia and was commanding annual sales of $1.4 billion in more than 950 product lines. From pasta, sugar and cereal to soft drinks, and analgesics its range was humungous.
Woolworths also hinted that the brand review will extend to the entire range of private labels, including Select and Macro.
The intent is to unshackle the competition with rival discounters Aldi and Cole. Curiously, the exercise comes after spending 33 years in building the brand and making it one of the largest selling generic brands in Australia.
“The issue with Homebrand is not so much price but a perception built around the product branding and packaging,” noted Credit Suisse analyst Grant Saligari.
The trigger for the rebranding exercise came when Woolworths’ chief executive Brad Banducci ordered a shake-up of the retailer’s private label grocery strategy in early 2015.
He openly acknowledged that Homebrand with its red and white logo had been giving a “perception problem.”
Meanwhile, Australian Retailers Association executive director Russell Zimmerman said Woolworths’ action may involve changes beyond branding to include product range and quality, reports SBS News.
“If the quality is going to be there then the consumer is going to buy it,” Zimmerman said.
The retail giant posted a first-half loss of $972.7 million in February and blamed it on its failed Masters hardware business.