Friday 1 August 2014

UK retail scene...



Having spent quite a lot of time away from the UK over the last few years and having retired from the retail grocery trade some 6 years ago I decided to take a closer look at the current supermarket trade that appears to be going through a difficult time.

The grocery trade has seen difficult times before, in the mid 70's discount stores like Kwik Save & Lo-Cost rapidly grew at the expense of the mid market and upper end supermarkets. So the rise of Lidl & Aldi today should be no surprise for the "big four". The problem is memories are too short, and of course many true grocers from those early days have long since retired. 

So is this just a repetition of those early days?

Well truthfully, yes and no.........certainly interest rates are a fraction of what they were in the 70's. Yes unemployment is high, yes money is tight (isn't it always) and yes people are more demanding.  However the question must be asked have the modern day supermarkets (the big four) lost their way?

I am more inclined to answer a   B I G   yes to the last question.

Tesco built its early growth on a "pile it high, sell it cheap" philosophy, in later years growth was through expansion both at home and overseas, now instead of being satisfied at being a leader in the "middle market" it is trying to be all things to all people. Consumers do not need to see Tesco store staff dressed in fancy dress costumes "making shopping fun" and being told to raise money for charity.  Staff "forced" to make idle conversation so you "feel" welcome.....what most consumers want is choice on the shelves (not just the current trend of 75% Tesco own brand that make higher profit margins), good prices across the whole retail shop (not just special offers on demand lines, and massive mark ups on toiletries and less price obvious items) and quick, efficient service.

Morrisons also have moved away from its true roots, whilst early Safeway trading practices were sound and solid, latter year Safeway policies and customer facing practices faltered. Ironically Morrisons seems to have been enveloped in those latter year practises.  I have little time for Ken Morrison but he was a "grocer" and knew how to watch the "pennies" with a "if it ain't broke, don't fix it" approach to trading.

Sainsbury still take the approach that they will allow you to shop with them and who can afford to do a whole weeks shop in Waitrose?

Is it any wonder "Joe Public" are voting with their feet and walking to Lidl & Aldi?  Frustrated as it can be with queues at the checkout all too often, but there is a fine balance between price-variety-service. The two main discounters are on the whole clean and simple stores, no frills, no pretence to be something they are not but just offer an acceptable product for an acceptable price.  Now if they can address those checkout queues currently I see no limit on what they can achieve in the UK.


Let us now look at food producers, have you noticed not just how prices are increasing, but in many, many instances how weight of items has been reduced. Compare for yourself, one example is the now 190gm jar of coffee that has always been 200gm (think this was Dowe Egberts, but I stand corrected). The biscuits that drop to 185gm instead of 200gm and so on. Look closely, you will be amazed and I am not even mentioning the quality of some supermarket own label items that have greatly deteriorated, especially in the processed food and ready to eat ranges.

Net margins in the 70's were as low as 2-3% in some cases, now its in double figures and of course shareholders want more.

So to use another catch phrase, come retailers.....GET BACK TO BASICS.

Simple, well stocked shelves......Two brand leaders and one own label of any item only......find out what the customer wants, not what buyers think should be stocked.....efficient checkout service.....a basic greeting not a life story or the Spanish inquisition from staff.....concentrate on YOUR role to provide food not sponsorship or fund raising in your stores.....a fair price and quality across the whole range of goods stocked, not high / low prices....

because if you don't it will definitely be:-

 Deutschland, Deutschland über alles, Über alles in U.K




1 comment:

joe said...


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Joe Pinzone
Casting Producer
P: 212-231-7716
Skype: Joefromnyc