By Fiona Ness on Tue 18 November 2014 in Topical
It probably isn’t news to anyone that the food grocery industry is fierce...
We often see the top supermarkets attempting to undercut each other to get on top. However, it is only recently that the liked of Lidl have been seriously considered as contenders in the UK.
Sainsbury’s and Tesco have both announced a drop in sales of 2.2% and 3.8%, as well as their shares falling by 2.6% and 3.8%. In addition, whilst Morrisons’ sales have actually risen by 2.4% and shares by 1.4%, they have taken drastic measures this year to bring their sales back from a 3.8% decline in previous months.
As you’d expect there are many factors that have influenced sales and share prices of top supermarkets over the last year, but Lidl’s strategy of attack advertising cannot be helping. It would seem that whenever one of the top supermarkets slips up, Lidl are there to make sure everyone knows about it.
In October a Sainsbury’s store made the news when an employee accidently used a poster, clearly meant for internal use in the window display. The poster read “50 pence challenge: Let’s encourage every customer to spend an additional 50p during each shopping trip between now and the year-end.” This error was noted by a few customers, however Lidl’s launch of the following advertisement the next day escalated the situation:
Only a week later, Lidl were on top form when Morrisons launched their ‘Match & More’ scheme. Which promises to match prices against Tesco, Asda and Sainsbury’s, as well as Lidl and Aldi. Lidl were then quick to point out why it was still easier to shop with them than to sign up for a ‘Match & More’ card with yet another advertisement:
In addition to responding to the other supermarkets strategies Lidl have launched a £20 million marketing campaign aiming to prove to UK shoppers, who were once embarrassed by shopping in discount shops, that they are able to offer the same quality and service at a much better price – which from our previous research is what the current shopper is looking for.
It is unclear as to whether it is Lidl’s on the ball marketing, or the significant changes in what shoppers are looking for, but either way Lidl have announced an additional 30 stores opening in the UK, taking them up to 620 as well as hiring 25,000 more staff, whilst some of the larger supermarkets such as Asda have made thousands of staff redundant.
As well as the clear store expansion Lidl’s stats are also looking promising. Whilst their market share sits at 3.6% (up from 3.1% last year), still significantly lower than the likes of Tesco, their sales have rocketed, growing by 18.6%. Lidl are clearly on the up as more and more midrange shoppers opt for high quality low price food. The only danger they may face is taking their ‘attack marketing’ strategy too far – it wouldn’t be the first time that customers have though companies with this type of strategy put too much focus on the competition rather than their needs. But it is safe to say that we are thoroughly enjoying Lidl’s strategy here at ProspectSoft.
What does this mean for you?
As an SME there will always be a bigger, better known brand, but that does not mean you can’t compete.
Lidl have kept a close eye on what the UK shopper wants and used this to their advantage. Whilst the larger UK supermarkets have focused on what each other are doing, and generally playing catch up, Lidl have focused on what they know they’re good at – high quality, low cost shopping. For the shopper who usually visits the midrange stores such as Tesco and Sainsbury’s this is ideal.
If you want to start competing with your bigger and maybe better known competition, the best advice we can give is to first work out what you’re good at – my guess would be that you have great products, that you know well and have the service to match. The next step is work out which areas of business don’t come so naturally, what is holding you back? Common struggles that we see in SMEs are disparate systems and a lack of processes which inevitably lead to inefficiencies. Left untouched these inefficiencies will only get worse. If you can maintain the things you’re good at and implement more efficient and integrated processes to handle the rest we bet you and your customers will notice the difference.