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No more sales: The Warehouse announces strategic shift from short-term discounts

  • News
  • September 26, 2017
  • StopPress Team
No more sales: The Warehouse announces strategic shift from short-term discounts

The Warehouse has announced a significant shift in its retail strategy via a new campaign developed by DDB and shot by production company Goodoil. According to the campaign, the company will no longer have short-term discounts, instead offering set low prices every day.

“That might sound strange coming from one of New Zealand’s biggest retailers, but it’s time to change," says Michelle Anderson, the executive general manager of marketing at the Warehouse Group.

"The Warehouse’s 'Everyday Low Price' message liberates customers from the confusion of traditional retail.”

Anderson explains that the aim of the shift is to simplify the process and remove the frustration consumers might face when they visit a store and find the price of a product isn't what they initially expected.

DDB chief creative officer Damon Stapleton says the aim of the campaign, which is set to run across TV, digital and outdoor, is to give viewers a message they wouldn't usually expect from a retailer. 

“We wanted to grab people’s attention with this campaign and surprise them with The Warehouse’s new retail message. A message that they weren’t expecting,” says Stapleton. “We’ve made people and their needs the focus rather than the products themselves, reflecting The Warehouse’s commitment to its customers.”

While there are variations to retail strategy, it can in most instances be reduced to one of two approaches: the consistent deployment of sales (think Briscoes or Stevens) or setting the prices at an affordable, but still profitable, level (akin to what Kmart does).

Until now, The Warehouse Group has employed a combination of both these strategies, but the company is now shifting its focus to the latter.

There are certainly advantages to both approaches, but biggest appeal of the 'every day low price' strategy is that it simplifies the shopping experience for customers. Regardless of the day or time, shoppers know the prices of the items and don't have to wait for a sale to buy anything at a reduced rate.

There is also a benefit logistically in that tags in stores don't have to be updated every time there's a sale – a particularly significant challenge when it comes to a retail enterprise as enormous as The Warehouse.

The obvious counter-argument is, of course, that New Zealanders love sales and that this could lead to shoppers taking their business elsewhere.

However, research into shopper behaviour in the local market has suggested that New Zealanders aren't quite as sales-driven as the common perception suggests.

A study conducted by TRA into the choices made when it came to buying beer found that consumers rarely compared prices. 

While consumers told researchers that they bought a specific beer brand because it was on special, their behaviour in the store told an entirely different story.

In his 2015 article 'The Lying Game', TRA managing director Andrew Lewis described the observation of the shopper behaviour as follows: 

"They would say things like, 'I grabbed this one because it’s on special and the price was really cheap'. So we’d ask how much it was, and they wouldn’t know. We’d watch the video and see no evidence of price comparison at all. All we can see them do in the video is spot the product and head straight to it. Indeed, from the video, the reason they bought that product would appear to be because it was the first one they saw coming into the store that triggered a strong enough association with their purchase occasion to drive selection."

The point here is that the New Zealand obsession is based more on what people say they do than what they actually do. And as researchers have become more adept at observing shopper behaviour, it has become evident that you don't need a constant stream of promotions to ensure strong business results.

On the topic of business results, The Warehouse Group recently posted a $58 million drop in profit from 2016. The group, which owns The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo chains, reported a profit of $20.4 million profit for the year to July 30, down from $78.3 million last year.

According to the NZ Herald, Warehouse Group chief executive Nick Grayston attributed $40.1 million of this profit drop to organisation's foray into financial services.

The company has since made the decision to exit financial services, selling this arm of the business SBS Bank subsidiary Finance Now.   

Credits:

Client credits: The Warehouse
Executive General Manager Marketing: Michelle Anderson
GM Marketing – Communications: Becki Butler
Marketing Manager – Communications: Sarah Slawson
TV Producer: Rob Linkhorn

Agency credits: DDB

Chief Creative Officer: Damon Stapleton
Executive Creative Director: Shane Bradnick
Creative Director: Brad Collett
Copywriters: Nick Dellabarca and Graeme Clarke
Art Director: Liz Richards and Paul Kim
Lead Business Partner: Nikki McKelvie
Senior Business Director: Kate Gilmour
Business Director: Jaheb Barnett
Business Manager: David Owen
Business Coordinator: Jarrod Stevenson
Planning Director: Rupert Price
Planner: Gigi Lee

Brand Production Company: Goodoil

Director: Fiona McGee
Producers: Claire Richards, Llew Griffiths
DOP: Ginny Loane
Post Production Company: Blockhead
Editor: Tim Parrington

Music Soundtrack: Hall & Oates, You make my dreams come true

Music Licensing and Sound Mix: Liquid Studios

Media: Starcom 

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