If the supermarket price wars have taught us one lesson, it is that low prices are no longer enough. In fact, indulging in a race to the bottom only strips value out of the market and reduces outlet share. Tesco is the prime example here, having seen its market share drop below 30% for the first time in nearly six years after the launch of its Big Price Drop.
Now is the time for retailers to redefine strategies and start thinking about what else they can do. ‘Pile it high, sell it cheap’ has long since stopped being the retail orthodoxy.
Many shoppers have decided there is more to life than the cheapest food and are making purchasing decisions based on different drivers. For retailers, this is a golden opportunity to place more focus on quality products and a positive in-store experience.
Since the recession, people have cut back on eating out, giving retailers the opportunity to bring the dining out experience into the home. The M&S ‘Dine in for £10’ is a classic example of how occasion-based marketing can be used to push sales.
Supermarkets need to be creative when it comes to the next big event. For example, what British delights can they offer over the Diamond Jubilee bank holiday?
Perhaps counter-intuitively in the current climate, we are seeing an increasing number of shoppers buying premium products, with premium own-label in particular enjoying phenomenal growth. Sainsbury’s has increased Taste the Difference sales by 14%, while Tesco has grown its Finest range by 7% over the past year.
Another area of potential growth is own-label products that don’t carry the retailer’s name. Products such as Tesco’s New York Soup Co and Chokablok, are becoming increasingly popular, giving them both value and brand desirability.
However, it is not all about products. Grocers must also offer an in-store ‘experience’. Today’s consumers want engagement. They are looking to speak with an expert who can provide advice on what they are buying or show them how to make the most of a product. For example, Morrisons’ customers cited the family butcher, dedicated fishmonger, delicatessen and specialist bakery as the top reasons why they chose to shop there. All of these things were deemed more important than price. Similarly, the most common reason customers go to Waitrose is because of its fresh fish and meat counters.
Of course, shoppers will always be motivated by price to some extent, but this doesn’t always have to mean promotions. For example, when consumer confidence is down, frozen food is attractive to shoppers because it is less likely to be wasted. Last year, only 1.2% of the population didn’t buy a frozen product of some sort. This represents a huge opportunity to expand ranges.
Understanding the full spectrum of shoppers, their motivations and mindsets will be key in helping the supermarkets bring value back into the market. Now more than ever, they need to be ‘known’ for something - whether that’s quality, advice, innovation or just plain feelgood factor.