Relentless price-cutting to keep pace with German discounters Aldi and Lidl is damaging consumer choice in the UK, which could even result in a company failure unless the biggest chains alter course, cautions Mark Price, managing director of British supermarket chain Waitrose and deputy chairman of the John Lewis Partnership.
According to him, dropping prices won’t make people eat more, thereby resulting in a zero sum game. “It is time that retailers start thinking of attracting customers in a better way. Otherwise the move down will create real difficulty for one or two players.”
Way back in 2009, Waitrose had launched a value range, Essential Waitrose, to keep shoppers in stores. Last month it launched a promotion letting customers pick ten items from a range of 1,000 at a 20% discount. “Eventually you’ve got to find something else. The only way to win long-term is to get customers trading up again or giving people another reason to come to your stores,” he explains.
No wonder Waitrose emerged as one of the best performing grocers according to figures released by market researcher Nielsen last week. It is thought to be more insulated from the consumer shift than the four biggest players – Tesco, Asda, Morrisons and Sainsbury’s.
“Rapid responses of Tesco, Asda, Morrisons and Sainsbury’s to each other’s price-cutting are creating only fractional differences in the performance of the best and worst. Aldi and Lidl, meanwhile, are opening stores faster than the ‘big four’, rapidly gaining market share,” Price observes. Aldi, which claims to be 15% cheaper than its bigger rivals on a basket of products, has 600 stores currently and aims to touch the 1,000-mark by 2022.