Convenience is the new weapon in the battle against Aldi and Lidl, says David Sables, CEO of Sentinel Management Consultants
It’s great sport tracking retailers’ shares over the Christmas period. However, a tactically strong Christmas execution is no longer a good indicator of long-term prospects in grocery. There are too many disruptive dynamics in today’s market.
Breaking it down, the primary drivers of shopper loyalty remain price (at a given quality), choice and convenience. Sure, other factors 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 fund their costly push into online and count the cost of Covid logistics, inflation has burst through into a market compressed by soaring 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 wrong reindeer. The jury is still out on checkout-free stores and q-commerce, so pumping money into 10-minute deliveries looks dodgy in 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 those primary drivers, this is the battle of choice vs price. Macro-economic pressures have increasingly pushed the shopper to price, whilst clever ranging in the discounters has made a lower-choice environment more palatable for them. Locations and store sizes have locked the big five into business models that ultimately cannot win on price, so in the search for a solution, maybe convenience is the answer.