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Why the big four supermarkets may never recover the ground lost to the so-called ‘discounters’

Date posted: 12 March 2015   |   Posted in: Blog

A few weeks ago, I read with interest a news story detailing how the UK supermarket industry had recorded its biggest collective price-cuts ever in 2014. This industry-wide trend has undoubtedly been driven by the impact of so-called ‘discounter’ chains Aldi and Lidl, who have captured serious business from the Big Four during the recession years.

Of course, the only reason those two particular brands are considered ‘discounters’ in the first place was due to the shamelessly inflated mark-up the Big Four supermarkets were frequently placing on low-cost and often low-quality produce.

In 2015, all the major supermarket brands are cutting prices left, right and centre in the hope that they can reclaim the ground lost but there are already signs that consumers, despite having more cash in their pocket, are sticking by Aldi and Lidl.

What the Big Four have to realize is that many consumers will simply not trust a brand that has over-charged its customers so much in the past. Many rightfully ask: “Why offer me value now, why not before?”

To use an analogy, why would you go back to an old employer who underpaid you and treated you poorly (but has now reformed) when your current employer has always paid you well and consistently treated you with care and respect?

Actually, the analogy raises another good point worth considering: Aldi has also created an excellent reputation for itself as an employer, with pay that compares well with the rest of the industry. Beyond the obvious operational improvements a happy workforce provides, the message this sends out to people generally is that Aldi is a company prepared to invest in its staff in order to provide a great experience for its customers.

Likewise, Aldi and Lidl both have a very honest and refreshingly down to earth approach to marketing. They know their target demographic well and their messaging is consistent from their employees, prices and products.

I think that it’s time for the media coverage surrounding the travails of the Big Four to better reflect that Aldi and Lidl have been successful simply because, in many ways, they were the better companies: not just better value for money but genuinely more in tune with and respectful of their customers’ needs.  As a result, consumers now trust them more than any of the newly-apologetic Big Four.

So, what can the major supermarkets do to redeem themselves? It’ll be a long process, I think, but the key will be to create special experiences for existing customers that are closely tied to the supermarkets’ realigned branding and values. Only by exciting their current customer base and creating a solid platform of goodwill to build on, will they be able to draw in new customers once again.

Jennifer Kennedy is sales and marketing manager at Cuckoo Design.

Source: Drum


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