Woolworths goes local to blunt supplier critics

Woolworths is considering launching a retail brand called "Woolworths Local" in an attempt to play up its close relationship with Australian farmers and suppliers.

Woolworths and rival Coles face an increasingly hostile political environment over their sourcing policies.

Australia's biggest supermarket chain, Woolworths has also created marketing imagery around a new label to be titled "W Local", which has the capacity to be slapped over its supermarket stores and liquor shops.

There is also a suggestion the label could emerge as a retail banner for its network of 600 convenience stores and petrol stations.

Britain's third-largest supermarket group, Sainsbury's, created a similar strategy for its 500-plus convenience stores and petrol stations in 1998, branding its small format stores Sainsbury's Local.

Woolworths has confirmed with BusinessDay its new Woolworths Local livery would have a wide scope in terms of its potential use across the retailer's store operations, as well as on the shelf as branding for frozen, tinned, snack and packaged food.

It will also have an online presence, as Woolworths has registered the domain name www.woolworthslocal.com.au .

Its use of the word "local" is also a cheeky stab at independent supermarkets who represent the third force in the sector and traditionally have marketed themselves as true local businesses that understand and cater to the shopping needs of their local community.

Woolworths has registered Woolworths Local as a trademark and is seeking to reserve a broad category of activities for the branding, including packaging and wholesale/retail supermarket operations.

A Woolworths spokeswoman would not comment on when the Woolworths Local banner might be rolled out or how it would be initially used, but said there was a lot of activity happening.

"Whether that be tailoring stores, tailoring ranges, working with local suppliers etc," she said.

The relationship between Coles and Woolworths and their suppliers is under a microscope from politicians, competition regulators and consumer groups.

The supermarket chains have been fighting a public relations battle over the past two years - as well as behind the scenes in the halls of Parliament - to demonstrate their ethical treatment of local suppliers.

Woolworths' grab for the "local" tag comes at a critical juncture for the wider industry, which is expected to face renewed pressure over supply-chain relationships.

Before the election the Coalition promised a wholesale review of competition laws, with both Woolworths and Coles concerned they might be a target.

In January, Woolworths launched a local food sourcing strategy to bring more locally produced foods to the shelves of its supermarkets.

Coles has a "Helping Australia Grow" campaign that highlights its relationship with local farmers, educating the public on how it is driving volume growth for its local supplier partners.

Coles has also signed a 10-year milk supply deal with dairy co-operative Murray Goulburn for its $1-a-litre home-brand milk offer, which is estimated to be worth more than $2 billion to the co-op owner-farmers.

The deal also allowed the co-op's Devondale milk to be sold by Coles and a select range of Devondale cheeses return to the supermarket shelves.

Both Woolworths and Coles have also signed a string of high-volume deals with small local agricultural producers, covering a number of grocery categories such as meat, vegetables and bread.

Meanwhile, Woolworths, Coles and food and grocery manufacturers are locked in talks to create a voluntary code that governs the relationship between the supermarkets and suppliers.

The negotiations were in part started to head off the prospect of the federal government forcing through a mandatory code, and have been dragging on for nearly a year.