Woolworth's sustainability strategy and green brand repositioning in Australia

Woolworth Australia

Redefining the Brand Image of Woolworth's Australia

Keeping pace with the rapidly changing needs of shoppers, retailers often must change their supply chains, sourcing, logistics and quality processes to ensure the right mix of products at a high quality level are available. In the areas of consumer packaged goods (CPG), groceries and consumer electronics, sustainability or "green" initiatives continue to be a high priority with consumers (Grant, 2008) . In addition, for manufacturers, distributors and grocers, the opportunities to gain cost advantages by streamlining sustainability initiatives continues to show significant potential (Ganesan, George, Jap, Palmatier, Weitz, 2009). The Australian consumer's requirements for accurate nutrient branding are forcing retailers to concentrate on how to transform their supply chains and enable greater sustainability over time (Bryans, 2009). Compounding this is the exceptionally fast growth of social networking adoption on the part of consumers globally (Bernoff, Li, 2008). Social networks are re-ordering the customer-retailer relationship nearly on a daily basis, which makes the speed and thoroughness of green and sustainability initiatives even more urgent. These requirements have become so significant, that there are emerging standards for how Corporate Social Responsibility (CSR) and sustainability messaging is managed throughout Europe and Australia (Karna, Hansen, Juslin, 2003). It is not enough however to merely change the marketing mix, advertising or promotional strategies to promote "green" or sustainability initiatives, which is often called "green washing" (Lee, 2008). What is needed is more of a focus on how to develop a value chain in a retailing business that lends itself to fulfilling and exceeding the expectations created regarding compliance to sustainability or green initiatives (McDonald, Oates, 2006). Consumers have learned how to be exceptionally discerning about which retailers are actually re-aligning their operations to these goals and those that are not (Lee, 2008).

For purposes of analysis, Woolworth's will be used as the retailer who is facing the challenges of staying in step with their customer base, who is gradually favoring other retailers who are "green" and more environmentally sustainable in their operations. Woolworth earned $27.2B in Sales and achieved $1.6B in Earnings before Interest and Taxes. As this retailer is vertically integrated, there are ample opportunities for increasing sustainability process performance and becoming a "greener" retailer as a result. Specifically concentrating on the steps to make the branding and corporate image of Woolworth's reflect greater sustainability and adherence to "green" initiatives, this proposal concentrates on market segment characteristics and how marketing and promotional strategies' can be used to strengthen them. Woolworth's needs to pay attention to and attempt to align with the strong green initiatives throughout Australia that are re-ordering supply chains and the operations of entire companies (Hui-Shung, Chang, Kristiansen, 2006). The proposal takes into account online, offline, in-store experience, and brand perceptions to create a unified strategy across the entire marketing mix (Glynn, 2009). The use of Web 2.0 technologies (O'Reilly, 2006) as part of the online marketing mix, in addition to the use of social networks (Bernoff, Li, 2008) is used to set the framework for online branding.

Introduction

Changing the corporate image of Woolworths' is far beyond just re-doing the website or sending out press releases saying the company has changed. In the very transparent and trust-starved consumers' minds of today, credibility and authenticity matter far more, and must be earned with far greater work, that merely using marketing as a mouthpiece for change (Kwon, Lennon, 2009). For the image of Woolworth's to change, its core processes, systems, people and orientation towards green and sustainability must change. This is the greatest challenge and impediment to companies changing their branding. It is easy to claim any brand image or value proposition in print, online or in broadcast media, it is quite another to create an organization that makes the corporate image and its claims real. The bottom line is that consumers are demanding that branding, especially "green" or sustainability messaging and claims be authentic and real (Lee, 2008). Ironically there are companies who have rushed to get on the "green" or sustainability bandwagon and failed miserably because they failed to make the necessary changes to their supply chains, operations, distribution channels or service (Corkindale, Belder, 2009). For Woolworths to be successful with its redefinition of itself as more sustainable or green, it needs to create a more effective strategy of supply chain management, addition to increasing customer satisfaction with its produce, groceries and packaged goods. It needs to make the connection between augmenting its sourcing and quality standards with healthier, more satisfied customers looking for healthy, sustainable, or green products. This is in essence creating a unique, very relevant and focused story of how Woolworths' increases the quality of life for its customers. The intent of the proposal is to first define how Woolworths' can bring these positive attributes of its supply chain and operations forward so they can serve as the foundation of its green or sustainability messaging. After this is achieved, the creation and execution of a messaging platform and plan is defined, with focus on social media and its role in connecting with green or sustainability-focused consumers in Australia.

Change Proposal

Woolworth's primary focus needs to be on the quality of its produce, groceries and consumer-packaged goods first, and then re-define and strengthen its value chain as a result. Best practices in green marketing and sustainability concentrate on these areas of supplier quality management, setting agreed-on objectives for sourcing the highest quality products first (Peattie, Crane, 2005). Second, the focus on how to make supply chain management, fulfillment and logistics functions -- the most critical areas for transporting groceries and produce from the supplier to the stores - needs to be highlighted in the revised messaging and market positioning strategy. Why these core aspects of Woolworths' need attention is that consumers are more focused on authenticity and trust than ever before, especially in the claims made by companies who state they have sustainability as a core value (Prothero, McDonagh, Dobscha, 2010). In essence, Woolworth's need to be the company it says it is in its green and sustainability messaging if it is to be effective in its messaging strategy. The benefits to customers and the attributes, performance, processes and systems of a company to fulfill them need to be consistent if a company is going to gain trust over time (Bryans, 2009). With so much skepticism in the area of green marketing and sustainability, marketers claiming these attributes as part of their messaging have to provide concrete proof they are true in order to be believed (Lee, 2008).

Segmentation Strategy

The first step in redefining a corporate image and messaging campaign needs to begin with a focus on the core market segments. Using the online service QuantCast to analyze traffic to the Woolworth's Australia website, the following demographic profile has been created. Figure 1, QuantCast Demographic profile, shows the results. The primary market for the messaging and repositioning are primary young adult makes between the ages of 18 -- 34 who are less affluent yet have higher educations. This indicates that many of them are just graduating or are beginning their careers. The focus on social networking is prevalent in this demographic segment, which will make the online messaging strategies on Facebook, Twitter, blogs and other forms of social media critical (Bernoff, Li, 2008). This demographic segment also values egalitarianism and a sense of shared purpose on issues pertaining to the environment, which also fuels a higher level of expectations for customer service (Davis-Sramek, Droge, Mentzer, Myers, 2009). As the primary target market for Woolworth's sees egalitarianism as a form of shared services, there is the expectation that "we're all in this together" pervades not only the brand but the in-store experience that supports the messaging. The implications for this from a messaging standpoint include creating unique, valuable customer stories of how customers are getting unique benefit from Woolworth's green or sustainability message and how these benefits make their lives' better (Prothero, McDonagh, Dobscha, 2010). It is in these stories of customer success that the essence of the new messaging and corporate image need to emanate from -- the stories bring greater credence, credibility and identification on the part of the customers to Woolworth's being green and environmentally responsible.

Figure 1: QuantCast Demographic profile of Woolworth's Australia

Strategy Planning and Execution

For the messaging and branding strategy to be effective, it must capture the unique strengths of Woolworth's and be understandable by all channels. The focus on multichannel support for the messaging needs to start with online media, as this is the preferred channel that the Woolworth customer base of interest relies on. Online media needs to be planned with the concepts and design objectives of Web 2.0 in mind, which is illustrated in Figure 2. The essence of Web 2.0 technologies are their focus on how to provide prospects and customers with the flexibility of learning about new products through the channels they choose to. Online channels support marketing more effectively than traditional offline channels do, as their activity can be tracked and measured over time. As social networks, blogs, and websites all can be measured using analytics, the online channel is preferable. It also represents the channels that the customer base of interest for Woolworth's relies on the most.

Figure 2: Web 2.0 Meme Map

Source: (O'Reilly, 2006)

The development of online advertising needs to start with a microsite, or smaller website that has been search-engine optimized (SEO) so that it will appear on Google search results. The selection of keywords to build the optimization on is critically important, and need to be relevant to the target market of interest. The content on the site needs to be more focused on how to have a healthy lifestyle and attain life balance. This is consistent with the concept of Woolworth's being a trusted advisor to the core segments of interest.

The social networking applications that need to be used for communicating the new positioning and branding story include a Facebook Fan page, Twitter and blogs written by members of the supply chain teams selecting produce and buying the products. They can comment on how they rely on high standards to ensure the products they buy are fulfilling the vision of green or sustainable performance of the company. Finally the section of each electronic platform, from the microsite to the blog and also social networking applications, all must reflect the stories of customers who rely on Woolworth's to assist them in living the kinds of lives they want. The use of candid videos and the promotion of an online video contest could also add significantly to the authenticity and transparency of the entire green branding campaign. Traditional offline media will be used in a supporting role to online media, with billboards, placards and short television commercials communicating the story of green or sustainability first, and the microsite second. The strategy is to use all traditional offline media to drive traffic to the online sites to better capture customers and get them to engage interactively with the messaging and the brand.

Recommendations and Conclusion

For Woolworth's to be successful in transforming their messaging and branding, they need to first ensure their company has aligned internally to meet this goal. This potentially means changing the practices within the supply chain management, quality management, and sourcing operations to make the company actually be green or sustainable in scope. This also translates into changes in their approach to logistics and transportation, looking to reap the rewards of sustainability in these areas as well.

Once the organization is aligned, creating an online-centric strategy that uses stories to resonate the brand with younger consumer is critical;. This is not a push-based approach to selling; rather it is one focus on creating and sharing knowledge of how to live a healthy and balanced life. The point of the stories is to bring customers into the store through identification with the concepts and messaging shown.

The execution of these strategies needs to stay focused on the appropriate message for the best possible medium. Blogs need to read more like an unbiased article and less like a brochure, and the use of social media needs to appeal to the needs consumers have for freedom and health. The messaging also needs to concentrate on a unified multichannel strategy that points consumers to the website and online, as the analytics possible today using social networking application and Web 2.0 tools will also augment marketing effectiveness over the long-term as well.