Race to the bottom is supermarket suicide

UK supermarket shoppers are less price-sensitive and more quality-conscious than their European counterparts, new research shows, demanding a fresh look at marketing strategies in the grocery sector.

The shopping landscape has never been so susceptible to change, as the supremacy of the ‘big four’ supermarkets in the UK continues to subside and newcomers Aldi and Lidl exert greater influence.

Earlier this month Tesco reported a 92% drop in profits, while Sainsbury’s suffered its biggest sales decline for 20 years in the three months to mid-October, and although Morrisons’ sales contraction is slowing, it was still down 5.6% in the quarter to 2 November.

It has never been more important, therefore, to understand what makes grocery shoppers tick to get them through the door.

Considering that shoppers are increasingly flocking to low-priced supermarkets Aldi and Lidl, it might be surprising to learn that just a third of European shoppers and even fewer in the UK are primarily driven by price, according to Kantar Media’s latest TGI Europa study, shown exclusively to Marketing Week.

“The instinctive reaction in bad times is to slash prices but the segmentation we’ve undertaken reveals that there are only a couple of groups that are out-and-out savers,” says James Powell, senior marketing manager at Kantar Media TGI.

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The study of 55,000 people across Britain, Spain, France and Germany reveals seven shopper types: ‘promiscuous purchasers’, ‘strategic savers’, ‘quality crusaders’, ‘convenience kings’, ‘accustomed acquirers’, ‘ethical empathisers’ and ‘conscious connoisseurs’.

Only 9% of the British population falls into the most price-sensitive group of consumers – ‘promiscuous purchasers’ who are bargain hunters interested in value rather than any one brand. This compares to 18% in Germany, 24% in France and 22% Spain.

That suggests UK consumers are flocking to Aldi and Lidl for more reasons than just price. Aldi increased sales by 26% year-on-year and Lidl by 17% in the 12 weeks to 9 November, according to Kantar Worldpanel.

‘Strategic savers’, who stick to a strict budget and are attracted to promotions, account for 18% of the total population across all four countries.

But British shoppers are far more lavish than their continental counterparts, it seems, judging by the fact that 23% fall into the ‘quality crusaders’ category – the most popular category for the nation. These shoppers are driven by superior quality and will pay a premium for it.

Despite Spain being one of the countries hardest hit by the recession, 20% of its shoppers are happy to pay a premium for good quality, and it also has the smallest proportion (14%) of ‘strategic savers’.

Conversely, Germany is home to the largest proportion of ‘strategic savers’ (21%), which Powell says may seem counterintuitive at first glance, considering it has been less affected by the recession than Spain, but he suggests it could be argued that “Germans are perhaps more discerning and a bit more disciplined about price, and at a macro level this is helping the economy”.

Germany is also the most ethically driven nation, with 12% of the population determined to buy Fairtrade and eco-friendly products. Just 6% of Britons fall into the ‘ethical empathiser’ category, the lowest percentage of all four countries.

“Perhaps we kid ourselves in Britain that we have ethical considerations, but in fact, relatively speaking, we are way behind the rest of Europe,” says Powell, who suggests people may have been forced to put their ethics to one side during the economic downturn.

Along with France, Britain has the smallest population of ‘conscious connoisseurs’ (both 5%). These are savvy and passionate shoppers who get their food knowledge from magazines, professionals, word of mouth and ingredients labels. This again may seem surprising, considering the popularity of shows such as MasterChef and the Great British Bake Off in the UK.

France has the largest population of ‘convenience kings’, those most dependent on location, opening hours, parking and ease of use. Around twice as many people in France (20%) are driven by convenience as in Britain (11%), Germany (10%) and Spain (9%).

Of the four countries surveyed, Britain has the largest population of ‘accustomed acquirers’ (15%), who are slaves to routine, have a narrow brand repertoire and are more likely to be solo shoppers. Two-thirds as many people in France (10%) have the same shopping habits, while the percentage is even less in Germany (9%) and Spain (8%).

The vast discrepancies between countries should be an eye-opener for brands looking to target consumers across borders – and at home, where the grocery sector may wish to reassess its stereotyping of supposedly price-conscious UK consumers.

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Comments
  • Martin 30 Nov 2014 at 10:24 am

    The article misses an important insight. It does not point out the similarities between the segments and the importance of Novelty, Quality and Availability across the types (look at the diagrams).

    Arguably Lidl and Aldi must be providing all three in the UK and may explain why they are doing so well v the “predictable” supermarkets, if price alone is not that important. I am not sure “discounter” is a valid description of them today and maybe over focuses on price as the key visit motivation

    Segmentation is useful and also can miss this kind of thing.

    Mapping supermarket strengths across the segments would be very revealing.

  • Caroline Davies 1 Dec 2014 at 12:29 pm

    Perhaps the reason the French are so driven by Convenience is because they have limited choice in terms of store locations and opening hours? My parents live in rural France and their local supermarket closes for lunch, and is the only one within a considerable distance… whereas I live in a UK village, yet there is a choice of at least 5 big supermarkets within 20 minutes drive, 2 of which at least offer 24 hour shopping.

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