Supermarket shopping - where's it going next?

Posted by Nigel Wilson on 18 November 2014 | Comments

There’s a lot of talk surrounding the problems Britain’s ‘Big 4’ supermarket chains are suffering. The ‘Big 4’ being Tesco, Sainsbury’s, Morrisons and Asda

The popular reason on the street is because of the German discounters - Aldi and Lidl. But that’s not the only reason. Let’s look back for a minute, and look at my local situation, which is probably similar to towns throughout the UK ...

In the early 1990’s there was a rush for space. At that time, I remember when Ashford in Kent had one small Tesco, and a town-centre Sainsbury’s. There was also a small Safeway

Suddenly, within a couple of years, two massive Tesco stores opened - on each side of the town - plus a huge Sainsburys.

For local shoppers it was a dream; the availability of a huge range of products, in a large retail environment, with comfortably large aisles. The interiors were modern, fresh and dynamic

It was the time when Archie Norman was running Asda, and the re-design of their store interiors was pioneering the change in supermarket standards. Ian Maclaurin’s Tesco had set the benchmark for high standards of quality and service. Exciting times!

As time went on, the Ashford stores expanded. Both Tesco’s were extended, and Sainsbury’s added another 40% selling space. At which point, the stores were becoming a bit too big

As the retailers were battling for increased share of consumers’ purses, new techniques were introduced: the appearance of BoGoFs, Tesco’s Clubcard provided the launch of the loyalty card - simultaneously capturing vast quantities of data about their customers’ shopping habits. The proliferation of non-food, principally clothing and consumer electronics was another trend.

And then, the advent of home delivery, making supermarket shopping easier, but perhaps less value driven as the in-store offers and promotions weren’t so easily available.

The recession and food price inflation took its toll, and when Aldi and Lidl started to become more aggressive, customers started to wake up. Apart from price, the two German discounters improved their in-store experience, through layout, product choice, and service.

At the same time, convenience stores increased in number. Shoppers find them easier and quicker to pop into for quick, convenience purchases. The flip side of home delivery is that shoppers buy the bulky, boring items online, and get the smaller, everyday items locally. Why spend 10 minutes walking around a vast supermarket when a pint of milk can be grabbed and paid for in a fraction of the time.

Food waste has become a hot topic. Consumers now recognise that what appears to be a great BoGoF often results in waste.

Whilst the supermarket shopping experience 20 years ago was a great improvement, it’s now morphed into a bit of a nightmare. The stores have got larger, they sell more lines, and for time-pressed parents accompanied by frustrated kids, the shopping experience is actually now longer, harder and much less pleasant.

Finally, the loyalty card offers and vouchers have become unbearably complicated. I remember last November, using Clubcard points to buy wine. The offer was so difficult to understand and implement, it took three members of customer service staff to explain. Needless to say, the confusion re-occurred at the checkout, turning what could have been a fun experience into ‘was it really worth it’?

So in summary, whilst Aldi and Lidl are competitive on price, that’s not all. The stores are smaller, more appropriate in size for shoppers short on time. Their range offers quality and value. And their pricing is transparent - not hidden and caught up in complicated offers and loyalty deals.

I haven’t yet mentioned Waitrose, which is my local, go-to store. Yes, they’re more expensive, but their range is more interesting and selective as well as the basics, and their loyalty scheme is simple - one card presented at the checkout, and money off at the till

But back to the Big 4: retailing - like life - is dynamic. It changes, and so must our supermarkets. There are calls for reduction in space, which makes sense. Pricing needs to be competitive, with clarity and transparency. And yet shoppers will expect - indeed insist on - the highest possible standards they’ve become used to

Above all, today’s consumers have an abundance of choice. They will choose what suits them best at any given moment. The retail market is arguably more competitive than ever before, whether it’s price, value, range or service. It’s not easy for retailers! I wonder where it's going next?