Retailers will have to go up or down for growth
There is room for growth in today’s Tesco-dominated grocery environment, but retailers will have to go to extremes - either upmarket or discount - to achieve it, delegates at The Grocer’s Going for Growth conference this week were told.
Addressing the question of how to grow in a polarised market, Waitrose marketing director Christian Cull, Booths buying director Chris Dee and Cook MD James Perry attributed their success to upmarket offers that provided a vital point of difference from the price-sensitive multiples.
Cull said: “We think the winners need to be focused and differentiated. There are plenty of customers who care about provenance. Waitrose gives them the quality and trust that they need in the long term.”
He cited its initiatives to help South African citrus fruit farmers, banana growers in the Windward Islands, and small and local suppliers in the UK. People needed to understand that quality comes at a price, he said. “Certain myths must be exposed. Food costs what it costs for a reason.”
Dee agreed, adding: “There are three trends: mass affluence, an ageing population and a need
to trust brands. Older shoppers are cash rich and time rich - the nirvana to all marketers.” Booths has responded by shifting its centre of growth upwards, he said. “We’ve given more emphasis to premium brands and tried to reinvent the role of own label.”
Developing a premium offer was not the only way forward, delegates heard. Single price retailers Poundland and 99p Stores are also carving out sizeable slices of the market.
Poundland chief executive Dave Dodd said it planned to open 30 new stores this year and had identified 800 locations in the UK where Poundland would work. He said: “You have to have a durable, flexible and scaleable business model.”
Landlords were becoming more amenable to single-price retailers, 99p Stores commercial director Hussein Lalani added. “It took a lot of convincing that we would increase footfall. But Land Securities offered us a site and now we’re approached by other landlords.”
Summing up the potential size of the pie for discount and premium retailers, Perry said: “Sir Terry Leahy’s mantra is ‘we give people what they want’.We believe in giving them what is good.There will be polarisation: evil corporations on one side and retailers such as Whole Foods Market on the other.”
Liz Hamson