Australian supermarket group Woolworths, owning Countdown in New Zealand, is getting rid of its Homebrand private label, which will be merged into another private label brand, called ‘Essentials’. Countdown did not comment on the subject.
Easily recognisable by its iconic red and white packaging, Homebrand has had a long history in the market, having being launched by Woolworths 33 years ago as a budget label covering everyday products.
Whilst the brand has built a position as the cheapest option amongst its entry-level competitors, in the long run – and with a supermarket war well underway – such reputation might have had an adverse impact. As a whole, its 950 product lines annually generate about NZ$1.57 billion in revenues, but they are often perceived as low in quality, dragging the whole company’s image down with them.
And Aldi is closing in. Despite a $600 million investment into reducing grocery prices and improving service in stores, in an attempt to snatch market share from its fierce German competitor, Woolworths’ sales have been falling for three consecutive quarters.
According to some analysts, the chain is trying to correct the course by focusing on a more up-market Essentials packaging. In a statement, a company’s spokesman explained that the move will help them deliver ‘even greater quality and value’.
It is hard not to connect the dots to the recent appointment of Brad Banducci as new CEO for the group. In May 2015 Banducci himself, who at the time was managing director of Woolworths Food Group, suggested that a change in direction was required.
“The issue we’ve got with Aldi is providing the same value experience in our store as you would in Aldi, which requires us to rethink and re-engineer some of our entry level products, including some of our entry-level own brand,” Banducci told investors.