Convenience is the new weapon in the battle againstAldi and Lidl, says David Sables, CEO of Sentinel ManagementConsultants
It’s great sport tracking retailers’ shares over the Christmasperiod. However, a tactically strong Christmas execution is nolonger a good indicator of long-term prospects in grocery. Thereare too many disruptive dynamics in today’s market.
Breaking it down, the primary drivers of shopper loyalty remainprice (at a given quality), choice and convenience. Sure, otherfactors play a part – such as ambience, ease of shop and service –but these take a back seat in today’s hot marketplace.
The pressure on the mults is rising. As the major retailers fundtheir costly push into online and count the cost of Covidlogistics, inflation has burst through into a market compressed bysoaring input costs, supply chain crises and now staff strikes.With discounters regaining share, the mults are naturally nervous,investing in innovative strategies for fear of backing the wrongreindeer. The jury is still out on checkout-free stores andq-commerce, so pumping money into 10-minute deliveries looks dodgyin their finance departments.
But it could be just the right move. For a decade we’ve seen‘mults vs discounters’ as the share tug of war. In terms of thoseprimary drivers, this is the battle of choice vs price.Macro-economic pressures have increasingly pushed the shopper toprice, whilst clever ranging in the discounters has made alower-choice environment more palatable for them. Locations andstore sizes have locked the big five into business models thatultimately cannot win on price, so in the search for a solution,maybe convenience is the answer.