European discounters Aldi and Lidl have been stealing a march on big multiples like Tesco and Asda, aggressively enticing shoppers in through their doors with lower prices and basket-beating deals.
But with research showing that price is only the fourth-biggest driver behind shoppers’ choice of retailer, and with 94% of customers who shop at a discounter also regularly shopping at a multiple, there’s a huge opportunity to fight back.
So here are the eight key areas where we think change needs to happen if the multiples are going regain their market share…
1. Simplify tiers
Research shows that consumers consider the discounters’ own brand products (usually their cheapest offerings) to be comparable in quality to mid-tier products at a multiple. Which puts the discounters streaks ahead in the price war and makes competing on entry-tier product ranges almost irrelevant. Multiples need to focus on differentiating between their tiers, where possible offering both a mid-tier and high-tier product range and making sure there’s a very clear proposition about what makes the high tier superior.
2. Offer comparable products
People often cite price as being one of the key reasons multiples have lost market share to discounters. However, the multiples need to fight the temptation to try and price-match across the board, or they’re likely to take a profit hit of approximately £1bn. The most significant area when it comes to price is the 1,500-or-so products the multiples have in common with the discounters – so the focus should be on offering comparable costs on those products that overlap, rather than trying to match them on everything.
3. Improve operations
There’s no question that implementing the previous step comes with a cost, but people often overlook how much money some simple operational improvements can save. For example, lots of stores have poor visibility of how many hours it actually takes to carry out the daily processes required to meet customer demand, meaning that employee shifts are often misaligned to demand across the week. This gap between the intended store-operating model and the in-store reality often results in huge losses, in both time and customer satisfaction. It’s key that organisations don’t let their focus on external competition distract them from strengthening their internal processes.
4. Align marketing campaigns
On average, blind taste-tests say that the quality of multiples’ products is higher than that of the discounters – regardless of price. In fact, some recent research we did showed Asda Smart Price Cheddar Cheese to be the winner with our blind-testing cheese-tasting panel, despite also being the cheapest. So the multiples shouldn’t be afraid to shout about their quality. If they can market both the standard and the value of their basic ranges in a similar way to the discounters, this will definitely resonate with consumers.
5. Myth-bust perception
Most people think that the discounters offer service and quality that’s comparable to a multiple, despite the fact that research says otherwise (That’s mainly down to expectation-setting – if people’s expectations are low, as is true for Lidl and Aldi, then it’s easier to look good). But multiples need to myth-bust this in their marketing and keep reminding consumers of the facts: that they can offer them a far superior range, better service, shorter queues, fresher products, better taste and the same like-for-like prices as the discounters.
6. Increase availability
Shoppers are quick to notice when a supermarket has availability issues, and out-of-stocks are a huge irritant. Yet retailers often review and drive availability at a whole-store level, which can direct action in the wrong places. A more tactical approach is needed, focusing on the availability of core products so that there’s never a time when a customer can’t find what they really need. Multiples also need to be clear on non-core products and why it’s not possible to always have them in stock, promoting their commitment to low cost, freshness, no waste, etc.
7. Create a passion
Despite clear evidence that multiples are better than discounters in just about every area, people still continue to love places like Lidl and Aldi. Why? Because people rarely care as much about facts as they do about experiences. They want a positive and enjoyable shopping trip and they want to feel enthusiastic about what they buy. So while multiples do need to think about myth-busting in the ways I mentioned in steps 4 and 5, the key comes in recognising that experience is almost always a bigger motivator than fact. They have to give customers a reason to feel passionate about them and their products.
8. Promote ease of shop
People perceive that it’s quicker and easier to shop in a discounter, but that’s only partially true. Queues are actually often longer in a discounter, but since the range is so much smaller than at a multiple the overall experience may be faster – despite that meaning that the customer may not have got everything they needed. So from a marketing perspective multiples need to remind customers of the advantages of shopping at one store that has everything they need, which will ultimately provide a quicker-per-item shop. However, they also need to commit to working on internal processes to genuinely increase the speed and efficiency of a consumer’s shopping experience – the walk has to match the talk.
