Woolworths red-faced after Nielsen refuses to endorse price claims

Date
    September 15, 2015
    Canberra Times

Market research company Nielsen has refused to endorse Woolworths' claim that its prices are cheaper than Coles.

Woolworths' latest attempt to convince consumers that its prices are cheaper than Coles has backfired, after global research firm Nielsen refused to endorse its claims.

After investing $200 million into reducing grocery prices over the last six months, Woolworths published advertisements over the weekend claiming that Nielsen data in June, July and August showed its prices were cheaper than those of its major competitor.

"It's official, we're cheaper. We don't just think so  ... it's independently proven," the ads said.

However Nielsen has refused to endorse or validate Woolworths' claims and says it played no role in the analysis that led to the claims.   


"We do not in any way support or validate the current Woolworths advertising claims that compare Woolworths' pricing with their major competitor  –  it's something Nielsen simply does not do," said Nielsen's Asia Pacific executive director and head of marketing, Michael Walton.

"Clients conduct their own analysis on this data and their teams draw their own interpretations and conclusions," Mr Walton said.

"The recent advertising campaign by Woolworths reflects Woolworths' own internal analysis and interpretation of Nielsen data. Nielsen does not make public endorsements on a client's own analysis or interpretation of its data."

Mr Walton declined to confirm market speculation that Nielsen had asked Woolworths not to use the ads again and had threatened injunctions if it did not voluntarily desist.

Woolworths declined to comment.

"We're not claiming it's incorrect – we simply don't endorse these claims," Mr Walton said.

The ad campaign – the first since Woolworths started phasing out its unsuccessful Cheap Cheap marketing campaign last month – has angered Woolworths' major rival.

In an internal memo seen by Fairfax Media, Coles managing director John Durkan described Woolworths' claims about supermarket pricing as "misleading".

"Over the weekend Woolworths claimed in advertising that its prices are now cheaper than Coles, based on data from market research firm Nielsen,"  Mr Durkan said. "I want to assure you that this statement from Woolworths is completely untrue.   

"I am confident that our customers will respond positively to the reality we deliver – not the tricky perceptions created by one of our competitors."

Woolworths said last month it had invested more than $200 million into reducing grocery prices since February and its prices were now as cheap or cheaper than Coles. However, the investment had done nothing to boost same-store sales, which fell 0.9 per cent in the first eight weeks of 2016 after falling 0.9 per cent in the June quarter.

Woolworths' misstep threatens to antagonise its major rival, which has so far taken a rational approach to the escalating price war, eschewing aggressive discounting in favour of reducing everyday prices on key grocery items and maintaining its weekly specials program.

Woolworths' claims were based on the retailer's own analysis of figures supplied by Nielsen's Homescan panel, which tracks the shopping habits of a panel of consumers over time – what they buy, where they buy it and how much they pay.

The data is sold to all the major supermarket chains and their suppliers, who analyse the data using their own reference points and use it to improve their offer to customers and boost sales.

Mr Walton said he could not recall a time when a retailer had used the Nielsen Homescan data in this way.

"Most people tend to want to use the service for what it's intended – to find better ways to looking after customers,"  he said.

Commonwealth Bank analyst Andrew McClennan said it was important for supermarkets to make sure they could validate any claims they made around value.

"When it comes to value and value perception that's something that's tested every day in the market, customers are pretty clever and they'll work it out themselves," Mr Mclennan said. "Nothing speaks louder than the actions they take."