By IRENE CHAPPLE marketing writer
As dust from a vicious legal battle settles, the supermarket industry has turned back to the real fight - earning a bigger share of consumer spending.
A key weapon in this fight will be branding.
The revamped industry - which has sales of $9.3 billion - is now effectively a duopoly of Progressive Enterprises and Foodstuffs.
Australian retail giant Foodland Associated - owner of New Zealand's Progressive Enterprises - finally swallowed the Woolworths supermarket chain last month.
The $690 million deal had swerved around various legal obstacles based on objections from competitor Foodstuffs, which argued that the deal was anti-competitive.
Before the Woolworths deal, Foodstuffs had been the industry's clear winner. Now, Progressive holds about 45 per cent of the market and is on the warpath.
Rebranding is high on Progressive's list of priorities. It is bloated with different brands and already, Woolworths' Big Fresh is tipped for the trash.
The overlap of full-service supermarkets Woolworths and Foodtown means others will go. The risk, as with all rebranding exercises, is alienating long-time customers.
Big Fresh's dramatic rise and eventual demise effectively tracks the changing desires of the supermarket shopper.
The first store was opened in Mt Wellington in 1988, based on a successful United States retail concept, Stew Leonard's. The chain - once dubbed the Disneyland of Dairy Stores by the New York Times - included costumed characters, live entertainment and a petting zoo in its shopping experience.
Big Fresh did much the same, with singers perched over the aisles serenading late-night and weekend shoppers, mooing cows, groups of singing sausages and giant egg-laying chickens.
In its early years, Big Fresh was a huge success, outpacing Woolworths on average store turnover. At the time, entertainment was a drawcard for shoppers. But that asset was rapidly taken over by the shoppers' desire for convenience and lower prices.
Progressive's managing director, Ted van Arkel, says Big Fresh is too high-maintenance. "It takes a lot of space and has a lot of gimmickry with it. That was fine in the early 80s but consumers have moved on."
He says research now shows that consumers are in supermarkets more than 70 times a year. Convenience is priority: "People want to be in and out."
Tim Morris of Coriolis Research believes the Big Fresh concept died away because it lost its novelty. Like Disneyland, part of the attraction was scarcity. When stores cropped up nation-wide, the appeal became lost. Since 2000, four Big Fresh stores have gone leaving nine, which will be phased out within two years.
Progressive is undecided on whether it will discard the Woolworths or Foodtown brand. "It depends on location and what kind of store it is," says van Arkel. "But we need to do some sort of rationalisation."
But problems could arise wherever it turns. Woolworths has a high national profile but is slightly weaker in Auckland. On the flip side, Foodtown - New Zealand's first supermarket - is strong in Auckland, weak elsewhere.
But if a Foodtown replaced a Woolworths, "what would the Christchurches and Gores of this world think?" asks Morris.
"It's something from Auckland. If they'd been shopping at Woolworths for 30 years, I don't think they'd want an Auckland brand."
Indeed, customer feedback will be the driving force behind any change.
Focus groups and research company Colmar Brunton are advising the company, says van Arkel, "but it may be a process of evolution rather than revolution".
He concedes rejection of a nation-wide brand may result in Foodtown staying in Auckland, and Woolworths everywhere else.
Anyway, despite potential branding problems, the ultimate supermarket asset will always be location, says Morris, with price coming a close second.
Consumers will pass one supermarket to go to another if the second is cheaper - sometimes. The rule of thumb, explains Morris, is that the second supermarket has to be at least 5 per cent cheaper before it entices the shopper.
Which introduces Pak'N Save, Foodstuffs' star player, which is by far the most successful supermarket chain in New Zealand.
Countdown is going head to head with Pak'N Save, says van Arkel. Progressive is also looking to franchise its remaining 3 Guys and Price Chopper stores, a programme already in place in the South Island.
Sales of house brands are also tipped as a future money spinner. In Britain, house brands account for an astounding 45 per cent of supermarket sales. In New Zealand, such sales are miserably low, sitting at about 10 per cent.
Progressive will dump Woolworths' No Frills and First Choice brands to focus on the Signature and Basics labels, says van Arkel, who believes the market has huge potential.
Meanwhile, as executives huddle over the new toy and wonder at its potential, van Arkel says it's simply business as usual at the supermarkets.
"[Progressive] have bought a business but not for the sake of closing down stores.
"That's not the name of the game. We're looking at growing the network."