Britain’s retailers are in the midst of a revolution. Tesco made £1bn annual profit for the first time in 2001, rising every year until 2010. This year their profit collapsed and its market share fell to 28%. Grocery prices fell by 2.1% during 2015, as Lidl and Aldi continued to capture British wallets.
Most of us are no longer loyal to big supermarkets. 67% say they “shop around more than they used to, to get the best deals” and most of us agree that the quality of the goods in Aldi and Lidl are “as good as other supermarkets”. At the same time, 35% of adults in the UK now say they would “buy everything online if they could”. Britons are already the biggest online shoppers in the EU. Aldi has now announced that it is to open an online store in 2016 and Amazon launched one-hour deliveries of chilled and frozen food in London and Birmingham recently (expected to be followed soon by an expanded Amazon grocery offer). Our grocers are going to see further change.
They excel in meeting the requirements of a single weekly shop, with aisles organised functionally by category, and ample car parking for shoppers to fill their car boots. The problem is that ‘online’ supermarkets also do the big weekly shop brilliantly – with the added advantage of being able to do it from the sofa, in your pyjamas, with a cup of tea.
How should big supermarkets respond?
As a nation we are reverting to ‘little and often’ shopping trips, and shopping for a specific meal. Rather than filling a trolley during a weekly shop, more and more people (particularly younger consumers and those based in cities) are choosing to shop as and when they need it – only thinking as far ahead as tonight’s dinner. We want inspiration, self-expression and even self-indulgence. However, there is very little excitement to be found in the tinned food aisle of my local supermarket.
Supermarkets need to dial up the inspiration to make grocery shopping feel less like a chore and more like a journey of discovery. In September Tesco launched a trial in 50 stores where products are merchandised by recipe rather than category, placing products such as pasta and tinned tomatoes adjacent to each other, while Lidl has launched their ‘Lidl Surprises’ campaign specifically designed to inspire shoppers with fresh thinking. Will this be enough?
While Lidl and Aldi have shown that keen prices and high quality can go together, supermarkets should brace themselves for more turmoil in 2016, as they struggle to please a fickle and more discerning public.