Institute of Grocery Distribution research about how
shoppers plan to buy their Christmas food reveals three telling figures about
the potential for Aldi and Lidl.
Of those shoppers intending to visit a discounter -
-
62% will do so to save money
-
40% will go because of the quality of the food
-
17% will go because of fancy foods like lobster
tails
The numbers confirm what we already know, namely that low
prices are the overriding reason for discount shopping. But what may be
surprising is that low prices are so much more important than quality.
Equally telling is the finding that, even at Christmas, only
17% will visit a discounter for speciality foods. The lobster tails and fine
wines may be attracting the media hype, but at heart they are a publicity gathering
fringe activity, unlikely to be generating big volumes. It is the low prices
that matter to most discount shoppers, and the presence or absence of more
exotic foods will not matter a jot to them.
The current gap between price and quality puts a ceiling on discounters’
growth potential, but finding the right solutions will not be easy.
The key is to understand what consumers mean when they talk
about quality, but not all consumers will view quality in the same way.
Many regular Aldi and Lidl shoppers are delighted with the
quality of the foods they buy there, not because they are prepared to
compromise, rather they have tried the various products, and know the ones that
they like. These precious core customers must not be alienated.
It is likely that the gap between price and quality is
greatest among less frequent shoppers. But quality takes many forms. It could
be lack of choice that makes shoppers down rate product quality. It could be
simply that the discounter version does not taste as good as a branded
equivalent. On fresh foods it could be lack of consistency -some days the
products are top notch in terms of freshness, appearance, texture and flavour,
but some days they are not. Aldi and
Lidl seem to have taken the view that the answer is to add a premium range akin
to Tesco’s Finest or Asda’s Extra Special, and throw in the exotic range of
food and wines. They will need to do more to bring the number of shoppers
buying because of quality closer to the number buying on price, and they must
not lose their price position in the process.
Meanwhile, their
competitors have their own tightrope to walk, and theirs is the degree to which
they can reduce prices, yet keep their shareholders on
side.
Recent performance statistics issued by Kantar
Worldpanel indicate that quality issues are not yet hampering the discounters
who continue to forge ahead, helped by a number of new stores, and the continued lack of radical pricing action from any of the traditional supermarkets There have been
murmurings that the tide may be turning in favour of the mainstream supermarkets,
but if so, it is turning very slowly.
