Inside Retail Weekly

2096 Inside Retail Weekly

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INSIDE RETAIL WEEKLY FEATURE: Talent tops the list Retail leaders Richard Umbers & Michael Ford on talent and failing fast. p14 FROM THE SOURCE: Angus Harris Harris Farm Markets co-CEO details future vision. p20 NEWS: The Good Guys committed to IPO CEO Michael Ford outlines IPO plans and beyond. p02 NEWS: Danoz Direct targets multichannel growth New CEO, Liz Diles, driving changes. p03 OPINION: Assessing Kogan's ASX potential Reading between the lines on Kogan.com IPO. p06 FEATURE: The surcharge debate Surcharge Free movement draws mixed reaction. p16 Inside news and views on the world of retail since 1972 JUNE 15 2016 F O R M O R E R E T A I L N E W S , V I S I T W W W . I N S I D E R E T A I L . C O M . A U I S S U E 2 0 9 6 Aldi drives private label rethink for Coles & Woolworths BY DIMITRI SOTIROPOULOS I N S I D E T H I S I S S U E : Last week Woolworths announced it was scrapping the Select private label brand it introduced in 2005 as a mid-tier brand covering over 1000 products. Select now joins the already axed Homebrand private label as part of CEO Brad Banducci's efforts to lift struggling sales. The supermarket heavyweight has instead turned its attention to rolling out the epony- mously named 'Woolworths' private label over the coming years. At present, between 20 and 25 per cent of supermarket shelf space at the two major Aussie supermarkets is dedicated to private labels, according to Brooke Tonkin, a senior industry analyst from IbisWorld and author of IbisWorld's recently released Supermarket And Grocery Stores industry report. This figure is expected to rise to 35 per cent by 2020-21 as supermarkets offer more private label products under fewer private label brands. So don't expect the two supermarket leaders to be deterred from focusing on their private label offerings any time soon. "Considering the price war that's been going on over the past five years and increasing push for their own private labels, I can't see Coles and Woolworths doing a 180 on that strategy over the next five years," Tonkin told Inside Retail Weekly. Both supermarkets have focused less on profit margins and more on market share in recent years – a strategy that has hurt Wool- worths' profitability, asserted Tonkin, while increasing private label sales has enabled Coles to post profit growth over most of the past five-year period. German discount supermarket, Aldi, has also enjoyed profit growth over that period, which Tonkin said has lifted the industry's average profit margin over the past five years. Prior to Aldi's entry into Australia in 2001, private label products were con- sidered the cheap and nasty alternatives within supermarket aisles. RRP $14.95 continued on page 12... F O R M O R E R E T A I L N E W S , V I S I T W W W . I N S I D E R E T A I L . C O M . A U I S S U E 2 0 9 6

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