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The supermarket-telco connection

Coles, supermarket, down downShoppers at Woolworths are more likely to have their mobile phone with Telstra, while those at Coles are more likely to be with Optus – and the correlation reflects how the supermarkets and telcos are positioned in their respective markets. That’s the word from new research by Roy Morgan Research.

According to Roy Morgan Research, 47 per cent of Australians who mainly shop at Woolworth are Telstra mobile phone customers, compared with 39 per cent of Coles’ main shoppers. 22 per cent of Coles’ main shoppers are Optus mobile phone customers, compared with 19 per cent of Woolworths’ main shoppers.

Roy Morgan argues that in both cases the difference is statistically significant and shows a real link between consumers’ choice of supermarket and choice of mobile service provider. Roy Morgan posits that if the Woolworths-Telstra and Coles-Optus connections aren’t arbitrary, the question is what connects choice of main supermarket with choice of mobile service provider?

The answer lies in the most basic tenet of market positioning: Quality versus Price. The two supermarket giants have distinguished themselves as the ‘fresh food people’ and the home of ‘down-down’ prices, respectively.

As the chart below shows, Woolworths is more commonly associated with quality and Coles with price – just as Telstra and Optus are.
Screen Shot 2016-08-11 at 10.13.39 am

64 per cent of grocery buyers who mainly shop at Woolworths say the one thing their supermarket is best known for relates to quality, compared with 44 per cent of Coles’ main shoppers. Conversely, 35 per cent of grocery buyers who mainly shop at Coles say the store’s defining attribute relates to price, compared with just 18 per cent of Woolworths’ regular customers.

When it comes to mobile provider, 71 per cent of Telstra’s customers say an issue pertaining to Quality was among the reasons they chose the provider, compared with just 28 per cent of Optus’s. And just as with supermarkets, the situation reverses when it comes to price: mobile owners with Optus are over twice as likely as those with Telstra to cite price as a deciding factor, 61 per cent vs 29 per cent.

Michele Levine, CEO of Roy Morgan Research, says that there is a correlation here as it relates to the supermarkets’ push into telecommunications.

“Recent news suggests Woolworths may be planning a greater push into telecommunications,” Levine said. “Each supermarket is already offering mobile phone plans as a Mobile Virtual Network Operator (MVNO), and the network owner it has signed on with is the best fit. Woolworths’ mobile services use the Telstra network, while Coles’ agreement is with Optus.”

Levine added that while mobile owners signed up with an MVNO tend to be seeking cheaper rates, those who choose the burgeoning ALDIMobile as their preferred option are more likely to cite network coverage as a reason they picked the provider, reflecting the high score for its network operator, Telstra.

“This suggests that even MVNO customers often know full well which network they’ll be on, and it plays a part, after price, in determining which one they choose. While network operators all need to weigh up the revenue from selling on expensive networks to virtual providers, MVNOs themselves need to consider how they can distinguish themselves in a crowded market and target customers based on whose network they use. This is clearly important for the supermarket MVNOs in particular, with customers who already align closely with their respective network provider.”


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