London Produce Show 4-6 June
German discounters the talk of the UK
The big guns in the supermarket sector have received an almighty shock to their systems during five years of recession, particularly in the last three years as Tesco, Asda, Sainsbury’s and Morrisons (The Big Four) watched around £3 billion being chipped off their collective potential turnover by competitors at both the premium and discount ends of the retail scale (Kantar Worldpanel).
After waiting patiently in the wings for some time, discounters Aldi and Lidl have recognised that their time has come and, switching quickly through the marketing gears, they have bombarded consumers with reasons to switch allegiance.
Aldi is the stand-out performer of recent times. Nearly a third of the British population shopped at Aldi at some time in the last three months of 2013, while the market leaders all lost market share for the first time in many moons.
That monumental change in a nation's shopping habits saw sales at Aldi in the 12 weeks to November 10 rise 31.1% on the same period in the previous year (Kantar Worldpanel). Perhaps even more tellingly, the average amount spent with the German-owned chain by each customer per visit was up 15%.
Aldi's share of Britain's grocery market has spiralled from 3.0-3.9% in the space of a year, with new store openings supplemented by well-targeted TV ad campaigns and a social media barrage, as well as its intelligent decision to position itself within the repertoire of its larger competitors and challenge face-on the snob factor some UK shoppers have traditionally attached to the value sector.
Rather than expecting consumers to ditch Tesco and its brethren en masse, Aldi contents itself – at least for now - with picking off the promiscuous shoppers and providing them what’s left outside of the weekly shop.
As executives of both chains sit in their boardroom clinking flutes and sipping discount champagne, their counterparts at Tesco, Sainsbury's, Asda and Morrisons are no doubt propping up the saloon bar wondering why their share of the market continues to shrink. Tesco's share has fallen from 30.5% to 29.8% in a year, Kantar revealed.
Nobody is suggesting that The Big Four will lose that hard-earned status any time soon, but nearly 70% of the shoppers who currently use discounters told UK grocery think tank IGD they'll continue to use them even if their personal finances improve post-recession.
That figure, perhaps more than any that Kantar have come up with, should provide the heaviest ammunition for the big guns as they consider their next steps.
This disruption in the UK market is creating new opportunities for produce suppliers into the market as retailers of all shapes and sizes vie for sustainable competitive advantage. The question – ‘who can provide their customers with such an edge?’ – is sure to be a topic of fierce debate on the floor of The London Produce Show and Conference, Grosvenor House, London 4-6 June.
For more information:
Tommy Leighton
The London Produce Show
Email: tommy.leighton@londonproduceshow.co.uk
www.londonproduceshow.co.uk