Woolworths is dead – long live Woolworths

I think the news of the demise of Woolworths is probably a little premature – there is no doubt it's in trouble and the Woolworths of the future may bear little resemblance to the current chain – however I don't think that this is the end. The Woolworths brand has strong affection with many people who may not have shopped there recently but certainly remember it from their formative years. It's always been a strange store, selling a variety of goods from the famous pick and mix, through children's clothing, stationary and music/films, however in some senses this is probably what's caused its demise. With the pound stores taking one audience and the supermarkets taking another, Woolworths has struggled to know what it stands for.

WH Smith was in a similar position 2003, having no real focus and being undercut on all sides by the supermarkets. This changed however when they started to focus on their core offering - their books, magazines, news and stationary - and reduced focus (and retail space) on entertainment products such as CDs and DVDs. Understanding what customers valued in the store allowed them to ensure that the stores stocked what they wanted and to concentrate on when customers wanted it - leading to an increase in their store locations at places like airports and train stations. These decisions have changed WH Smith's fortunes – it may still have some way to go and the current climate isn't going to help, however WH Smith chief executive Kate Swann was clear in her vision when she said in 2004 "I want people in the UK to get to the point where they say, 'Of course I go to Smith's for stationery; of course I go to Smith's for books; of course I go to Smith's for my magazines.' That's what I want Smith's to be for."

Starbucks is one company for which it's clear what they stand for and that's great coffee. Before Starbucks came along it was possible to buy a coffee in the high street, but Starbucks redefined what coffee stood for. They set a standard for it, built a business around it and were very clear that it was all about the coffee. Every decision they made whilst growing into a global brand was centred on their belief in their product and how it should be enjoyed. Whilst others for example were creating flavoured coffee beans, Starbucks refused to adulterate their product and stood firm by their beliefs in keeping the product pure. They didn't always get it right though and in their early days their stance on not using low-fat milk initially bemused customers who had to go elsewhere to enjoy their "skinny" latte.

They learned though that there is a balance to be struck between giving the customer what they want whilst ensuring the business is focused on what its core values are and what it stands for.

Woolworths on the other hand has lost its way – it doesn't seem to stand for anything in particular and is a jack of all trades – master of none.

It was once well known and well respected for its children's clothes. After securing rights to the Ladybird clothing brand in 1984, Woolworths went on to launch a hugely successful range of children's clothes in 1986 which was supported by PR, TV and press advertising. Despite going on to acquire this brand in 2000, Woolworths have never really leveraged it to the full. Rather than building on this they went on to launch Big W which further confused customers as to what they stood for and subsequently failed and was axed in 2004.

Customer loyalty cannot be bought – either through discounts or points – in all surveys on customer loyalty, top of the list after convenient location is that the retailer stocks what they want - if a brand gets this fundamental wrong, all other efforts will fail. Any new buyer of Woolworths will need to first take a step back to understand what Woolworths stands for, what its key values are and then build a business around this. Reducing or removing product lines which run counter to this and focusing on what the customers want within the context of these values.

Only in this way will Woolworths be able to set itself apart on the high street and reinstate itself as a brand that customers understand and say, "I go to Woolworths for…"

Without trust there is nothing

I was reading a new report this week from Forrester about how customers rate European banks. Across 7 different European countries, the UK stood out with the weakest scores to the question of whether customers felt their bank does what's best for them – with just 21% agreeing to this statement. Given the current credit crunch you could be forgiven for expecting this type of response as people lose faith in their banking institutions, however this is an annual survey and the results for 2008 are only marginally lower than for 2007. The report went on to discuss how customer advocacy improves a banks chances of winning new customers by word of mouth and that of those customers who think their main bank is a good customer advocate, the majority of these go on to be promoters.

Backing this research up, a recent study by Carlson Marketing of the financial services industry showed that customers with stronger relationships are 75% more likely to recommend to friends, 42% more likely to remain a customer and 57% more likely to buy additional products. As detailed within this study a key element of stronger relationships is trust which is defined as a belief that the company has the best interests of the customer at heart, and can be depended upon for respect, openness, tolerance and honesty.

Although many banks score badly in the area of trust, the UK based Nationwide Building Society has recognised this and actively looks to build trust with customers and potential customers. Its TV advertising highlights how other banks have preferential rates only for new customers – unlike Nationwide which has a fair pricing policy for all; it's ATMs highlight how there are no cash withdrawal fees and all its call centers are UK based. In 2001 the Nationwide launched an initiative to articulate the society's values to customers which included putting customers first, delivering best value and exceeding expectations. Since this time they have more than doubled their current account customers, tripled their credit card portfolio, significantly grown savings balances and doubled their annual profits. Not bad for a bank which is focusing on doing what's right for the customer, not just what's right for the bottom line.

The largest direct bank in the US, ING Direct announced recently that it will suspend foreclosure on all occupied family homes until March 2009 and suspend all evictions until January 15^th. Their CEO, Arkadi Kuhlmann is quoted as saying "We help customers buy homes with mortgages only if we believe they are suitable and affordable. Consequently, once we get customers into a home, we work hard to help them stay there. We hope this foreclosure suspension will provide some relief during the holidays to those experiencing financial hardships. I call on others in the mortgage industry to step up and help homeowners with foreclosure relief during these difficult times". Now obviously banks are not charities and if someone cannot pay for their home the bank will have to take steps at some point to recover their investment – however what ING shows is that this can be done whilst also recognizing that these are real people with real lives – this is sure to build trust as ING stands out from the crowd.

Spanish Bank Caja Navarra takes this one step further with its Civic Banking product. Unlike any other bank I've come across, Civic Banking tells you exactly how much money they make from you. Customers understand that banks are businesses and that business are there to make profits, however most customers don't actually understand how a bank makes money. Providing this clarity allows the customer to enter into an agreement with their eyes wide open, understanding what the bank is giving them and conversely what the bank is getting back. This isn't simply done however to provide transparency, the bank donates a percentage of the profits on the customers behalf to social projects. This allows the customer to see not only how much the bank is making, but also how much it is then giving away. The projects that the bank donates a percentage of profits to are not simply large charities but instead can be very small, localised projects, nominated by the customer and setup by the community. In one example a water saving project had requested £7,000 and this had been donated by just 113 people. Caja Navarra really do engender trust by providing true transparency and showing a genuine corporate social responsibility.

Given the importance of trust within relationships and the rewards that can come from this for financial institutions, there has been a noticeable hush from almost all banks since the credit crunch. For many this is probably due to still being in a precarious position and as the old adage goes, "when you have nothing to say - say nothing". However for many banks things have changed with government support stabilising them and so now is really the time to begin rebuilding trust.

LTSB in the UK are the noticeable exception to this with much of their recent outdoor activity focused around the message of a "bank you can bank on". While many of the larger banks in the UK have been focusing their advertising on savings messages - promoting great rates in the hope of attracting much needed savings balances - LTSB has been focusing their message on one of trust, reassuring customers and prospects that they are a bank you can bank on. If LTSB get it right all indications are that the savings balances will follow naturally.

Trust is a key component of customer advocacy, the visible expression of customer loyalty. Banks have historically scored low compared to other industries when it comes to trust and so now is the time to really put the customer first and start to rebuild that trust – the much needed profits will follow.

I am not a number - I am a free man (or woman)

Marketing to baby boomers is an interesting issue. Previously brands trying to attract an older audience could simply put an older person in the advert with an attractive pen or carriage clock and watch the customers pile in… well that was probably never true, but more recently the "older" generation has changed – it no longer considers itself "old" – age is just a number.

This really came home to me a couple of weeks ago when I was looking over some work we did for a financial services brand in the US. The brand had successfully communicated what it was about – telling people that it had products and services aimed at an older audience – the problem was its target audience of over 50's didn't consider themselves old and thought it was for someone "older".

This seems to be an increasing problem for brands looking to market to older customers, especially where these brands already have an established older customer base which they need to retain, but want to continue to attract new customers. A brand tackling this head-on is coffee & tea merchant Taylors of Harrogate - the ground coffee market has a skew to over 45's, so how do you make the brand relevant to new customers without alienating the existing customer base.

Taylors have done this with the introduction of new campaign, "The Coffee of Choice" which has a more edgy creative feel than the traditional corporate Taylors of Harrogate site and matches perfectly to their recent above the line creative. A tie up with Classic FM is helping to ensure the message reaches their target audience, but the creative is helping to make the brand stand-out and seem more relevant. This has been combined with a great selection of ground coffees which are packaged by occasion and blend – helping to appeal to both the new coffee consumer and the more established coffee connoisseur.

Nintendo has been targeting this market as well, but unlike Taylors who had an established audience; Nintendo was trying to create a market from the ground-up. Since the launch of the Wii and subsequently the Wii fit, demand has outstripped supply and the console has been propelled to pole position, with sales greater than both the XBOX360 and the PS3. This is largely down to the introduction of the gaming console to new segments – including the over 50's – or as Nintendo puts it "moving into the blue ocean", based on the book Blue Ocean Strategy. The advertising for the Wii isn't aimed at any particular age demographic and instead shows families interacting and playing with the console – something that is attractive to both parents and grandparents. The DS handheld console however has different celebrity endorsements to appeal to specific market segments, using Fern and Holly and Girls Aloud for the hard to reach younger female market and Nicole Kidman, Ronan Keating and Patrick Stewart for the older demographic with Brain Training.

With 80% of the UK's wealth and representing over 50% of the population by 2020, the over 50's are not a niche segment that can be communicated to using a one-size-fits-all approach. In fact, age based demographics are becoming increasingly less relevant – to create relevance a communication really needs to be personalised and to personalise something needs behaviours. Having communications based on how a customer behaves rather than when they were born will always create greater cut-through.

The brands that win here will be the ones that truly know their customers.