Why the big 4 only have themselves to blame
Ahead of this evening’s Tonight documentary, ‘The Rise of Discount Supermarkets’ (ITV1, 8:00pm), which we contributed to, I wanted to look at some of the factors that allowed the discounters to gain a foot hold in the UK and why the ‘Big Four’ only have themselves to blame.
They told us to demand lower prices and they asked us to switch from trusted brands to their copycat and ‘me too’ alternatives. They introduced BOGOFS, loss-leading deals and ultimately educated consumers into expecting and searching out bargains in favour of brands.
The big four grocery chains actually built their own brands on the commoditisation of everyone else’s.
And if the purpose of creating a brand is to build a customer following and loyalty that ultimately helps defend a territory or price point, then the big four shouldn’t be surprised that shoppers are now rejecting theirs in favour of the discounters.
They have helped to create a nation of savvy shoppers who are prepared to switch from brand to (own) brand based on the knowledge that a suitable alternative will be on offer, if they visit at another time or try another store.
In fact, you are actively rewarded as a consumer by supermarkets for not paying full price, with a knowing wink or a congratulatory pocket tap. It’s not about who has Heinz beans, it’s about who’s selling them the cheapest and, increasingly, does it have to be Heinz or can it just look like Heinz from a distance?
When you combine that with the economic climate since 2007, the need for shoppers to exercise that knowledge and the ease of doing so through technology, then the writing was on the wall.
And don’t think that this is only represented in certain demographics. This is right through the social strata, geography and gender. I stand alongside everyone else in front of the fixture in a way I previously wouldn’t have, debating over my preferred brand of deodorant, toothpaste or toothbrush and invariably coming away with something different.
And one of the greatest coups of the discounters has been encouraging the middle-classes through their doors. If you want a demonstration of this you should visit the Aldi store in Knutsford, part of Cheshire’s infamous ‘golden triangle’, for a car park full of Range Rovers and the occasional Aston Martin.
So can the supermarkets, which were built on devaluing brands ever since they helped to break the resale price maintenance of the 50s and 60s, encourage consumers to reinvest in them?
Well an improving economy will inevitably allow consumers the luxury of not having to watch every penny, but the cost-conscious consumerism of the last seven years isn’t about to disappear overnight. Bagging the Lidl Christmas pud that beat Heston’s in the Good Housekeeping taste test, at a third of the price, will remain a badge of honour.
So I’m not sure that the big four’s ‘brands’ have the answer in the short-term – Morrisons have already thrown their hands up and returned to their discounter routes with massive price cuts.
They will all fight tooth and nail to make sure they retain the same share of our weekly shopping basket by investing in bricks and clicks, with new formats and ‘click and collect’ becoming the norm.
But ultimately, and cast in their own image, it’s not their brands we invest in. Price will lead and I think the big four are going to have to accept that they are now part of our shopping repertoire and not the owners of the ‘big shop’ anymore.