We struggle to recall when each of the big four all lost market share on such a sustained basis.
The big four have been sleeping at the wheel for some time, driving price rises through regardless of the plight of their customers in recent years. Rather than cut prices, seemingly clever ruses were chosen to try and deliver customer value without necessarily cutting prices. The first and dominant strategy was to increase promotional participation, supplied by branded manufacturers, followed by vouchers and then price-matching
Price-matching was, with hindsight, perhaps the most insidious and insulting move for customers, reinforcing a determination not to compete on price and arguably the clearest manifestation of an oligopoly. However, the consumer was brighter than supermarket executives and started to seek different ways to save money. They cut down food waste to reduce baskets, started to shop at discounters and high-street value retailers, and more recently started to eat out at low-priced pubs.
”There has never been a better time for the innovative to look at food”
Asda smelt the coffee first, cutting out vouchers, downplaying promotions, easing the emphasis on the Price Guarantee, then cutting prices. However, collectively the damage was done, and now the industry clamours to re-establish price credibility.
The supermarkets’ plight creates opportunities for entrepreneurs to fill a void where standardisation, homogeneity and corporatism no longer work. So we assert that there has never been a better time for the innovative, the specialist, the focused, the creative and the nimble to look at food markets.
While a trickle more than a flood at this stage, the butcher, the baker and the candlestick maker may be on the cusp of a return to the high street; often supported by a café or a restaurant and an online capability.
Such a prospect has encouraging outcomes for town centre rejuvenation. It also forces suppliers to think, as Booker’s Charles Wilson suggested, to focus upon channels and businesses that offer growth: wholesale, foodservice, discount and premium. Rarely in recent times has it been such a good moment to be an food entrepreneur with an aversion to supermarkets.
Dr Clive Black is head of research at Shore Capital Stockbrokers