Discounters shattering retail paradigms – What is going on in the world of retail?

Take a look at that! In-store bakery, gorgeous fruit and vegetables. Doesn’t that produce look good? Much better than shopping in one of those horrible discounters eh? Well, no. These images are all from those ‘horrible discounters’. The truth is that while major chain supermarkets are scurrying to compete on price, the discounters are quietly doing exactly the opposite.

The CEO of Australian retailer Woolworths releases a statement acknowledging that they have taken their eye off the ball but ‘will not be beaten on price’. Aldi meanwhile are broadening their offer, smartening their stores and improving the shopping experience.

In the US Walmart numbers are weaker than expected. In the UK the major retailers seem all to be in a spin. Asda releases awful sales numbers, Sainsbury profit numbers are theworst for a decade, and Tesco’s problems are already well documented. Seeing Tesco, a firm which started with ‘pile it high, sell it cheap’ before improving their store experience dramatically, being beaten by new companies doing the same thing, is ironic.

I was in Ireland last week to launch the new engage business there, and found a similar situation. The discounter stores I visited are moving in the right direction. True, they still have the ring of ‘cheap’ but they are investing in the parts of the store that are important to shoppers. Lidl had a fair range of fresh product, all of which was nicely displayed and looked good. They had an in-store bakery with great looking bread, and a surprisingly large range of wine, covering a broad range of prices. Elsewhere the range was still pared back.

Across the road at the Tesco the aisles didn’t seem to have changed since I last visited. Some aisles were a little more interesting, but many (take a look at the sauces and condiments here) are mere row upon row of jars and bottles.

So what can we take out of this? I see a number of interesting points which could have a dramatic impact on the way manufacturers and retailers think about shoppers and shopper marketing.

Not all categories are equal

The discounters are getting things right this time in a way that they haven’t in the past. Their offer is far more than the one dimensional ‘price, price, price’ that is often perceived. However they choose carefully which categories to invest in, choosing to expand the range and breathe life into the shopping experience only where shoppers really need it. Other categories are given much less focus, a tight range, great prices and that’s about it. The ability to flex this model seems to me to be a major strength of this type of retailer.

Brands need to step up or die

Many brands are facing an existential challenge and yet don’t seem to be responding. Brands which don’t make the cut in a discounters tight range must surely have to work doubly hard in the retailers where they can still play a role. Sitting on a shelf and hoping the shopper will come to you seems to me to be a high risk strategy.

Big retail needs to market more broadly

Major retailers in many parts of the world seem to be caught in a spin. They are responding, but it feels as though they will be playing catch up for quite some time. Their obsession with price is perhaps distracting them from what they really need to do, and that is to create a fabulous shopping experience that shoppers value.

As I travel around the world I see a retail environment changing more rapidly than ever before, or certainly in my lifetime. What is happening in your part of the world? What is shaking up retail and what are the implications? It would be great if you could share via the comments section below.

PS – I’ll be continuing my travels to Amsterdam to present at the Shopper Marketing Congress on the 16th June. I hope to see you there!