Friday, 7 February 2014

Aussie Animals boost shopping at Woolworths

Woolworths, the largest Australian retailer and ranked 15th in the world by revenue, follows a four-pronged strategy for continuing growth:

1. Extend leadership in food and liquor

2. Act on the portfolio to maximise shareholder value

3. Maintain the track record of building new growth businesses

4. Put in place the enablers for a new era of growth

Woolworths has been implementing its strategy as planned. Not only is the retailer increasing its sales of food and liquor--with higher prices, higher market share, higher customer counts, and higher per-customer transactions--it is adding to its strength and preparing for new growth by expanding into online retailing. It purchased EziBuy Holdings last year to gain market share and expertise in e-commerce. 

The retailer's point of differentiation is fresh, local quality--specifically, that 96% of its fresh fruits and veggies are grown in Australia, and 100% of its meat comes from producers in Australia. And, thanks to the popularity of its private label foods, careful price negotiations with suppliers and a focus on reducing waste, Woolworths consistently enjoys gross profit margins at or above 23%.

From a marketing standpoint, Aussie Animals trading cards get the credit for at least some of the recent revenue growth. The cards are actually free: Shoppers receive 4 free cards for every A$20 spent in a local Woolworths store. In other words, the cards act like a loyalty reward programme--the more money you spend, the more cards you receive. 

When Woolworths launched the trading cards in mid-2013, children found the colorful cards (depicting native animals) irresistible and began collecting and trading them (in school and on Facebook). 

Immediately, parents were implored to buy more at Woolworths so kids could collect the entire set. A lively collectibles market sprang up online. Woolworths posted programme updates on Facebook (where it now has nearly 600,000 likes) and created a separate swap zone for trading the cards.

Then, in early December, Woolworths introduced a special holiday set of Aussie Animals, reigniting trading card fever at the start of the year's busiest shopping period. And it worked.

Clever marketing? Clever competitive tactic? Here's what the Daily Telegraph said:

Whoever came up with this little - let's call it a racket - is an absolute genius. It is the science of peer pressure and parents are not immune.