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Hitwise Intelligence - Sandra Hanchard - Asia Pacific

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Should Coles keep Kmart?

August 11, 2006

The decision by Coles Myer to bring some of its sub-brands under the Coles banner in its new branding strategy has prompted industry analysts to ask how consumers will react to brands such as Kmart leaving the market place. Hitwise data provides a direct measure of brand equity by online user searches for brand names, and so puts us in a position to study which brands have traction amongst consumers. The below chart indicates the share of searches for Coles' brands as well as a comparison to Woolworths:

AU Share of Searches

You'll see that both 'Kmart' and 'Target' have consistently received more searches than 'Coles' over a yearly period (Target under the new business model will be kept). Kmart and Target also grew considerably during the Christmas shopping period and spiked again in July prior to the end of the financial year. Furthermore, both the 'Kmart' and 'Target' brands received more searches than competitor, 'Woolworths' suggesting they are instrumental in Coles competitive strategy. The 'Bi-lo' brand which is also slated to be dropped receives significantly less user searches than the other Coles brands, so would have less impact from a branding perspective if it is phased out.

There's been further speculation this week that Wal-mart has its eyes on the Australian market after pulling out in Germany, with the objective of finding a market more aligned to American-style consumers. If Wal-mart does enter the Australian market it will potentially compete with Target Australia. I've performed a search term gap analysis for Wal-mart and Target Australia using Hitwise data from their respective markets to see which products they would compete on based on search term traffic to each website: