The Coles big red hand is back. Customers will see through it unless margins are trimmed too

---

Welcome to a midweek update from Unmade.

In today’s edition: a decade on, Coles reactivates the big red hand.

Only Unmade’s paying members get access to our full archive, which goes behind the paywall after two months.

If you’re thinking of attending our REmade retail media conference in October, membership also gets you discounted tickets. Earlybird bookings for REmade expire next week.

---

Coles’ big red hand is returning - but will it work without real cost cutting?

Tim Burrowes writes:

A few weeks back, I had one of those conversations where I found myself arguing for what I hadn’t realised was a minority view until I opened my mouth.

Over lunch with some executives, the talk turned to Australia’s most effective advertising campaigns. I nominated the Coles’ Down Down campaign which began in 2012.

I argued that while it never won awards for creativity, it deserves to be recognised as a key plank in Coles overtaking Woolworths.

In its initial version, it featured ageing British rock band Status Quo reworking their hit Down Down.

I remember the disdain I felt when we published the article in Mumbrella in July 2012. From Status Quo opening Live Aid to this downmarket effort was my thought at the time.

What I hadn’t realised until this lunch conversation though was that many within the industry still feel that same disdain, even after the results came through.

Until they relinquished it, the big red hand became one of the most distinctive brand assets Australia has ever seen.

That first ad, and its follow ups, played relentlessly. And annoyingly.

But it all helped reinforce that low cost positioning for Coles. They even did a follow-up commercial in which the rockers returned to acknowledge it was annoying, with the unapologetic caveat “But there’s nothing annoying about low prices.”

My lunch companions of a few weeks ago, who included an agency planning director with decades of experience, argued that it had cheapened the Coles brand and was simply tacky advertising. My argument was that was the view of awards-focused ad execs, not results-driven board members, or indeed price conscious consumers.

Which brings me to the present. It’s a first for me, but yesterday I learned of marketing news via TikTok.

@jamesform1211#coles #commercial #shoppingaddict

Tiktok failed to load.

Enable 3rd party cookies or use another browser

TikToker Jamesform1211 posted a video captioned “when you turn up to your local Coles and you can’t get in because their filming a commercial”

Shot at Willowdale Shopping Centre in Western Sydney, it appears to be a commercial-level production, with fully choreographed dancers in Coles uniforms waving their red hands to Everybody Dance Now while someone off camera continually urges them “You can smile!”

The return of the hand says a lot about the company’s changing marketing strategy since the departure of chief marketing officer Lisa Ronson last August.

Ronson was finally replaced by chief customer officer Amanda Mcvay two months ago. Bringing back the red hand looks like it might be her first big visible move.

However, it’s by no means certain to work. The supermarket marketing battleground is now much harder fought.

At the time Coles broke through, there was an element of lightning-in-a-bottle. Marketer Simon McDowell and Ted Horton, boss of the appropriately-named creative agency Big Red, came together, with a shared disdain for creative awards approval. All that mattered was the low cost message.

And that came from the top. John Durkan, at the time Coles’ merchandise director, said it all in the original press release about the Down Down launch: “Australian customers are feeling the pinch from a year of rising living costs including energy, healthcare and transport. We know our customers need our help now more than ever and we intend to keep going with new price cuts offering greater savings right across the store.”

Sound familiar? He was talking about the post-GFC landscape but might as well have been talking about today’s cost of living crisis.

At the time, the biggest PR problem Coles had was whether its prices were too low. They got flak for driving the price of milk too low for the farmers. No longer. Remember the days of $1 milk? Now a litre of Coles milk is $1.60.

Coles and Woolworths are now much more likely to be pinged for sneaking up prices.

It also helped that at the time, rival Woolworths’ marketing strategy and advertising execution was lacklustre.

The Woolworths “Monday, Tuesday…” work from the now defunct Droga5 Australia (awards chasers, not sales deliverers), which emphasised freshness rather than price left Coles with open territory.

Besides, Woolworths was making so much money anyway it didn’t need to bother to fight on price..

Presumably Smith St - the DDB-centred, bespoke Omnicom agency group set up a year ago by Lisa Ronson shortly before she was ousted - is behind the forthcoming campaign.

Now though, Coles has a different underlying pricing strategy to the Down Down days. That changed in 2019 after Durkan departed.

After Coles span out of Wesfarmers, it moved away from the price battleground. As the Australian Financial Review put it back in 2019, the company had decided it could not compete with Aldi on cost control and didn’t have the appetite to take on Woolworths with a price war.

Then along came Covid and all the supermarkets went gangbusters as consumers did battle in the toilet paper aisles.

Then came inflation and everyone sneaked up their margins.

Coles has only been listed on the ASX since the end of 2018. Back then, it reported annual profits of $1.7bn. In FY22 that number rose to $3bn. Coles’ FY23 results are the week after next.

When it comes to pricing strategy, Coles will also know that it now has a more fearsome competitor in Woolworths’ boss Brad Banducci, who took charge in 2016. Since his arrival, Woolworths refused to be beaten by Coles on price.

The dilemma for Coles is that unless it genuinely delivers “hands down” cheaper prices as the new slogan goes, the campaign risks driving down value perceptions without delivering sales.

“Great value, hands down”

Has Coles got the appetite for a real price war? Consumers would put their hands up for that.

---

---

Unmade Index remains marooned

Seja Al Zaidi writes:

The Unmade Index stayed flat for another day yesterday, rising by just 0.02% to finish at 696.2 points.

Domain led with a 2.04% rise, while Nine followed with a lift of 0.47% in share price.

Ooh Media had a sharp drop of 2.45% while IVE Group, fell 3.57% and ARN Media fell 0.96%.

---

Time to leave you to your Wednesday.

We’ll be back with an audio-led edition of Unmade tomorrow, in which I talk to the team at Thinkerbell about life after PWC.

Have a great day.

Toodlepip…

Tim Burrowes

Publisher - Unmade

tim@unmade.media