Woolworths is dropping its mid-range Select brand as well as killing off its Homebrand range.
The retailer will replace it with an eponymously named Woolworths brand as both private labels lost market share to rivals Coles and Aldi.
Select struggled because while it was about 10% cheaper than branded products, it was around 25% more expensive that Aldi’s house brands. It cut prices in the Select range as a result, although the Homebrand range was already the cheaper alternative.
The move to kill off Select was initially revealed in a briefing in March, but confirmed last week during an investor briefing. The move ends 11 years of the Select range introduced by former CEO Roger Corbett in 2005.
Select generated around $1 billion annually for the grocery retailer.
While it covered around 1000 products, a company spokesperson told Business Insider that the Woolsworths range will be expended further, and at a lower price point.
“This will become a food-focused brand (covering a couple of thousand products) – Select currently covers both food and non-food products,” they said.
“The Woolworths label will allow us to offer our customers fresh produce and food products that are more consistent in their promise and delivery.
“On price we will offer our customers greater value, which will see the Woolworths label being more competitive in the marketplace than Select.”
New CEO Brad Banducci told investors on Friday that the company is looking to grow sales by 4%, but first had to fix issues such as high “out of stock” levels, currently running at 4-5%.
During last week’s briefing, Banducci revealed that changes to Chinese law had impacted on the company’s sales of infant formula. Last year, a phenomenon emerged that saw queues of Australian-based Chinese internet entrepreneurs clearing the shelves of tins of infant formula to sell online.
The company is focussed on refurbishing 100-150 stores in FY17, having seen a 7% sales uplift in supermarkets that have already been refurbished.
But one major challenge that emerged in the briefing is company culture, with staff turnover running at 18-20%, especially amongst buyers.
Morgan Stanley analyst Thomas Kierath said the knock on effect was that store managers are often moved from store to store to cover gaps, which impacts continuity and execution.
“At Christmas 2015, only 30% of store managers were operating the same store as the previous December,” he said.
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