Woolworths to Renovate 170 Stores in 2013 to Boost Share of Fresh Food Market to 36%

Australian consumers should anticipate another round of marketing war between the country's supermarket giants as Woolworths (ASX: WOW) disclosed plans to boosts its market share of fresh food to 36 per cent from the current 28 per cent.

The strategy will be through renovation in 2013 of all 170 Woolworth stores throughout Australia. Woolies, which reported a net profit of $975 million for the first half of its 2012 financial year, has been losing some shares to main rival Coles, will also open 39 more outlets in 2012 and 120 more over the next five years.

The renovation would cover in-store bakeries, sushi counters, fruit and vegetable cutting stations and meat counters.

"We are taking all the theatre elements of our stores such as the sushi chef and bakers baking fresh bread, and these elements are being integrated into many stores across the country," Woolworths Director of Supermarkets Tjeerd Jegen was quoted by the Australian Financial Review.

Lizzy Ryley, general manager of marketing of the supermarket giant, blamed the loss of some customers to too many messages that confused shoppers. To bring back shoppers to its aisles, Woolies will launch a TV ad that shows the journey of fresh food from the farmers all the way to the supermarket's staff. The ad was created by Woolworths' new advertising agency, Droga 5, and was launched Sunday night.

The new ad is just one of more ads that the supermarket giant will roll out over the next weeks. It would feature various suppliers and staff such as a potato farmer, fruit picker, trucker, butcher, fishmonger and store manager. The cast are not ad agency talents or commercial models, but real Woolworths employees or suppliers.

The chain also updated its advertising slogan to "Australian's fresh food people" from "The fresh food people" to remind consumers the source of its fresh items on the shelves.

"Many people don't realise we're an Australian company - they think we're American, or owned by Asian investors - and they don't know that all our fresh meat and 96 per cent of our fresh fruit and vegetables are Australian," Mr Jegen was quoted by The Australian.

A few weeks back, Woolies and Coles engaged in a price war by cutting drastically the price of fresh vegetables and fruits. It followed the 2011 price war which focused on bread, milk and laundry detergent.