In an embarrassing gaffe around its most recent ad campaign, supermarket giant Woolworths Limited (ASX: WOW) is once again facing renewed pressure after global research firm Nielsen refused to endorse its claims that its prices are cheaper than competitor Coles.
Woolworths, which has invested over $200 million in reducing grocery prices since February this year, had published advertisements over the weekend claiming that Nielsen data from June to August indicated its prices were cheaper than those of its major competitor, Coles.
However, Nielsen is distancing itself the ads and has refused to back Woolies' claims, according to the Australian Financial Review.
Nielsen's Asia Pacific executive director and head of marketing, Michael Walton, said the company did not contribute to the analysis that led to the claims.
He explained that Nielsen does not in any way support or validate the current Woolworths advertising claims because it's something Nielsen does not do.
Adding fuel to the controversy, Wesfarmers Ltd's (ASX: WES) Coles supermarket has lashed out calling Woolies claims untrue and misleading.
The fumble may not have had a big impact on Woolies share price, which is down 0.4% in late afternoon trade to $24.68 when the broader market has lost over 1%, but it couldn't have come at a worse time as the retailer is facing increasing pressure from competitors Coles and German discount chain Aldi.
The company's stock has declined 8% in the last three months and is down close to 30% in the past year.
With Aldi gaining market share and Coles touted as the best placed local supermarket in a challenging industry, Woolies and its smaller rival Metcash Limited (ASX: MTS) are in trouble. This coupled by the lack of loyalty by supermarket shoppers will only add to both their woes.
Woolies' investment in its "Cheap Cheap" campaign has done nothing to increase its same-store sales, which fell 0.9% in the first eight weeks of 2016 after falling 0.9% in the June quarter.
The supermarket's latest claims were based on its own analysis of data from the Nielsen Homescan panel which tracks the shopping habits of a group of customers over time.
This data is sold to all major supermarket chains and their suppliers, who analyse the data using their own reference points and use it to improve their offer to customers and boost sales.
Nielsen's Walton added that he could not recall a time when a retailer had used the Nielsen Homescan data in this way because the data is only meant for internal use to improve customer satisfaction.
Woolies move shows how desperate things are becoming as it tries to claw back market share from its better-positioned rivals and this is another sign why I think it is too early for investors to pick the bottom for the stock or the sector.
