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Client survey by strategy consultancy Oliver Wyman shows:

Supermarkets score points in duel with discounters

Supermarkets in Germany have used the pandemic to extend their lead in customer favor over discounters. In terms of product selection, service level, freshness and availability of goods, the full-range supermarkets are clearly outstripping the discounters - and also gaining market share. A recent customer survey conducted by consultants Oliver Wyman in eight European countries attests to the robustness of German full-range retailers, which is otherwise only found in Switzerland. Thanks to a differentiated target group approach and good accessibility, the once struggling segment gained ground during the Corona period - a wake-up call for the discounters.

Supermarkets scored points during the Covid-19 crisis with a quality offensive, posing strategic problems for discounters. This is the conclusion of a customer satisfaction survey by strategy consultancy Oliver Wyman, based on more than 10,000 responses in a total of eight countries. "We are experiencing a renaissance of supermarkets," says Alexander Pöhl, Principal of the Retail Practice at Oliver Wyman. "While full-line supermarkets were still under a lot of pressure from discounters at the beginning of the last decade, the tide has turned. Today, discounters' corporate headquarters are looking for the appropriate countermeasures."

The study shows: For 26 percent of Germans, accessibility is the main reason for choosing a store, followed by product selection (21%), quality and freshness (14%), and only then price (11%) as an argument. "Attractive prices have become a matter of course, especially since supermarkets also offer attractive entry-level prices with their increasingly confidently placed private labels," explains Pöhl. "The first round went to the discounters, now the supermarkets have hit back." Grocery retail is a highly saturated market, he says, and delivery services such as Flink and Gorillas are now entering it. "This market is not getting any easier; there is a hard-fought battle for customers," Pöhl says.

One-stop shopping in the pandemic
The change in preference in stationary retail is also reflected in market shares: While discounters in Germany stagnated between 2016 and 2021, supermarkets gained - and the trend is still rising. In the pandemic, consumers particularly appreciated the short distances and a diverse range of products, says Rainer Münch, partner and retail expert at Oliver Wyman: "Supermarkets were able to use the momentum to support customers in one-stop shopping." As a result, he says, many consumers who previously used both systems - discount and full-line - in parallel and selectively were satisfied with a single, larger purchase. "Supermarkets have been able to win over many people in terms of product selection and meet the increasingly important desire for convenience in shopping."

In an international comparison, the Oliver Wyman experts see only supermarkets in Switzerland in a similarly good position compared with discounters. In Germany, the lead in time is also a reason: "Germany is the motherland of discount stores. Therefore, supermarkets in this country had to find a clear answer earlier than abroad to set themselves apart from the competition." In recent years, he says, they have invested massively in their quality, in their product range and in the issue of freshness. In times of pandemic, non-regular customers have also positively perceived this added strength and have become regular shoppers.

Discounters face difficult balancing act
Despite their own quality offensives, discounters continue to face a challenge. Their initial business model, based on strict standardization, has already been softened with the attack on supermarkets launched years ago. "Discounters attacked supermarkets before the pandemic with massive assortment upgrades." More branded goods, more organics, more regional products were the new guidelines - but in doing so, the price breakers moved even further away from the original clearly limited number of items, which stood for extreme efficiency and cost advantages. "The discounters keep hitting limits with standardized models. In the future, they will have to respond to customer needs in an even more differentiated and locally graded manner, but without forfeiting their cost advantages. This is a difficult balancing act," says Pöhl.

Supermarkets, on the other hand, can feel vindicated along the way by analyzing customer perceptions, Pöhl says. "They must continue to invest in IT systems and the supply chain to enable differentiation, quality and freshness." Even before the pandemic, many supermarkets had massively increased their spending on IT infrastructure and logistics, he says. "You can't manually manage an assortment for thousands of stores anymore - there are very smart systems in place." Because many stores now know their customers, their data and their preferences, they are meeting consumer demands in brick-and-mortar retail more and more precisely, he said. "Supermarkets have done very well in modularizing their concept and adapting it to the respective location," says Pöhl. While in some places they mainly sell bulk packs and entry-level brands, elsewhere they could convince with passion fruit, craft beer or freshly prepared sushi.

Source: Oliver Wyman 


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