No stopping Woolies and Coles – and good on ‘em

simon_sColes and Woolworths have announced respective entries into the clothing and insurance markets. Some would say it's another demonstration of their competition-smothering market muscle at work. We think it's not that simple.

Need a party frock? Move over David Jones. Coles is the place to shop, after the supermarket chain yesterday launched its own range of clothing.

The move is almost certainly an attempt to emulate the success of UK supermarket chain ASDA, whose oddly-named George range has in the past become the nation’s dominant clothing brand with more than 10% market share.

For what it’s worth, I reckon Coles will do almost as well. Most of us visit a supermarket once a week.

Clothes shops, by contrast, are in malls I prefer to avoid. And they’re expensive. For basics like a solid-colour polo shirt, why would I bother heading into a store where the stuff is designed for partying 20-somethings if I can get a good enough and cheap enough shirt at Coles for $20? And have a chance of sneaking it into the family shopping spend instead of paying for it with my pocket money?

That combination of convenience and price will clean up among grudging apparel buyers. And if Coles can nail its products, it may do damage beyond daggy dressers too.

Woolworths, meanwhile, has launched its own insurance products, starting with life insurance and pet insurance.

In a press release issued today, Woolworths Head of Insurance George Hughes said: “Our research tells us that many everyday Australians find insurance difficult to understand and access, to the extent that 95% of families do not have adequate levels of life cover. We very much view our role as that of a market challenger to provide everyday Australians with access to insurance products that may previously have been out of their reach or new types of cover that can protect against unforseen expenses.”

This is a fascinating statement because it shows Woolworths feels the market is uneducated about the benefits of life insurance. All those endless soft-focus ads of fifty-something widows still able to buy the grandkids something nice after hubby’s early demise seem not to have struck home. Woolies is happy to step into the breach.

Any second now I expect the usual lobby groups will hit the My Business inbox with complaints that these new products represent yet another demonstration of market muscle from the supermarket duopoly.

They’ll have a point, because the big guys get some pretty good breaks on rent and screw their suppliers down hard.

But they’ll also, surely, have to acknowledge that there’s some decent innovation at work here. Coles and Woolies have spotted niches no-one else is serving well. Good luck to them as they pursue them.

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