Discounters: the underdog of the retailing world

March 8, 2017

 

Looking at the Drinks Retailing Awards has historically been like looking at Olympic Gold medal tables: a handful of contenders taking the top accolades. Waitrose, like the States, has historically been the leader in the awards open to multiple retailers (i.e. not independents), challenged by Tesco.

 

But over the past couple of years a subtle shift has been taking place and never was this more noticeable than at the 2017 Awards, with Waitrose taking home proportionately fewer awards and the discounters walking away with proportionately more than ever before.

 

It’s not just at awards ceremonies that we’re seeing this. The financials are telling a similar story.

 

2016/17 heard Waitrose announce store closures and saw the big supermarkets struggling to hold onto their market share and for the most part declining, while Aldi and Lidl reported double digit growth. Sure, they’re coming from a smaller base but still…

 

It got me thinking.

 

Of course the economic climate is playing a role, but it seems to me that incumbents are struggling to keep up with shoppers’ changing habits, and more importantly their attitudes.

 

We’ve seen in our research that perceptions of discounters are overwhelmingly positive – especially among the affluent, those traditionally considered “out of target market”. All you need to do is look at the areas the discounters are opening in to get a sense of their strategic targeting.  Their key challenge: getting prospects over the mental barrier of what they think the discounter shop and experience will be like.

 

So what’s driving people in store? Contrary to what many think it’s not prices. It’s recommendation.

 

And once they’ve been in, there’s no going back. They fall in love with the experience: they’re saving money and it’s easier shopping because of fewer choices. This isn’t to say they’re not going to other supermarkets too, but they’re spreading their pound more shrewdly, leaving them with a sense of accomplishment. One might even go so far as to say this is leading to a happy shopper = a happy consumer.  

 

With this in mind, do you still ask yourself if the price cuts of discounters hurt your brands, especially those traditionally on the premium end of the spectrum? Maybe you should instead be asking yourself how this affects your shopper strategy or your distribution plan. More specifically do you know how to ensure launching in a discounter is a success and a natural fit with the overall discounter experience, whilst building your brand equity? Or maybe you should be considering going back to basics to understand who your shopper is today.

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