Sainsbury’s, Lidl, Starbucks: 5 things that mattered this week and why

Catch up on all the most important marketing news this week including the Sainsbury’s and Asda merger, Lidl pulling back digital spend and Starbucks’ move away from the “drumbeat of promotions”.

Sainsbury's

Sainsbury’s and Asda merger throws up brand challenges

The UK’s second and third biggest supermarkets confirmed they will be merging their businesses earlier this week, bumping Tesco from the top spot to create a new mega-player in the grocery space.

Sainsbury’s chief executive Mike Coupe described the deal as a “transformational opportunity” to create a new force in UK retail, saying that it will create a business that is “more dynamic, more adaptable, more resilient and an even bigger contributor to the UK economy”.

It is also a clear defensive move against the rapid growth and popularity of the discounters, alongside Amazon, which have been putting pressure on supermarket margins for some time.

So from a scale perspective, it makes sense. When the deal goes through in around 18 months’ time (subject to regulatory approval, of course), Sainsbury’s and Asda will control 31% of the market.

But how it will work from a branding perspective raises a number of questions – especially in grocery where it brings together two supermarkets that stand for very different things. That being ‘quality’ for Sainsbury’s and ‘value’ for Asda.

Sainsbury’s is adamant it will retain both fascias, but some analysts are suggesting the Asda brand will disappear from the high street entirely, saying shoppers looking for low prices will head to Aldi or Lidl, and those wanting convenience will go to Amazon.

READ MORE: The branding conundrum – Balancing Sainsbury’s quality messaging with Asda’s focus on value

Lidl’s ‘interrogation’ of digital causes it to cut spend

Lidl

Lidl has joined the chorus of brands raising questions over the effectiveness of digital media, admitting it over-invested and has since cut spend. Over the past five years, the discounter has massively increased it marketing spend and, in line with that, its digital investment. But media boss Sam Gaunt admits it went too far and that, on examination, ROI for digital was not as high as other channels.

Lidl is not the only brand to fall into the trap that more money needs to be siphoned into digital. Procter & Gamble had admitted the same thing and said that when it cut £400m from its digital spend it saw no negative consequences – in fact sales were up. Yet digital spend continues to soar as marketers follow consumers online and onto mobile.

Gaunt’s message is not that all brands should follow its lead in reducing spend. But he is calling for more marketers to do due diligence: to work out what KPIs are important to them and then interrogate digital spend to ensure it is offering return on that investment.

Lidl’s work meant it realised that too much of its money was being spent with low viewability and view-throughs – and that some was appearing in places it wouldn’t want such as in apps for kids’ game. By reducing both where it spends and how much it has improve digital’s ROI. It’s seems likely other marketers could find similar results.

READ MORE: Lidl scales back digital media investment after seeing poor ROI

Starbucks shifts focus after admitting it’s promotions were ‘one and done’

Starbucks digital

Starbucks is shifting its marketing after admitting it had a “one and done” attitude when it came to promotions.

Previously the company focused on one-off promotions which has led to a drop in sustained growth for promotions. It has reduced by 30% year on year the number of time-limited offerings.

Matthew Ryan, global chief strategy officer at Starbucks said the work had already begun but that the drinks giant still had a long way to go. He explained: “It’s part of an ongoing shift in our marketing, from a short-term ‘one and done’ focus to a sustained ongoing relationship focus with our customers.”

This doesn’t mean promotions are ending, instead they’re being revised to suit the individual. For example its ‘Happy Hour’ offer, where customers were offered a free Frappuccino, will now be offering a free drink more tailored to the consumer. The key to this is digital with the company encouraging users to sign up to direct digital contact.

These changes will culminate in a campaign in a three-month campaign in May that will try to “push afternoon sales.”

Moving away from this “drumbeat of promotional offerings”, as Starbucks COO coined it, is a good move on Starbucks’ part. Consumer trends show that people want a more local feeling and besides, as their sales reflected, if you don’t want to drink a ‘Unicorn Frappuccino’ you won’t – no matter if it’s on offer.

READ MORE: Starbucks moves away from the ‘drumbeat of promotions’ to build longer term relationships with customers

Holland & Barrett wants to steal a march in the natural beauty market

Holland & Barrett

Holland & Barrett’s new ‘cleaner beauty’ campaign went live this week, as the retailer makes moves to be known for more than just vitamins, supplements and veggie alternatives.

It wants to lead the natural beauty market and thinks The Body Shop’s young female audience is up for grabs. So it has pumped £500,000 into its latest campaign in an effort to get people thinking about whether their daily beauty products contain unnecessary chemical additives such as parabens and SLS.

It is a bold move with an equally bold ad, but having spoken to its CEO Peter Aldis, it is clear Holland & Barrett’s ambitions as a high street retailer go beyond the traditional role.

All of its in-store staff currently have a qualification in nutrition, but Holland & Barrett is looking to take that one step further and eventually bring in fully-qualified health professionals that will be able to do DNA and blood testing in-store.

While not looking to compete with conventional medicine, what Holland & Barrett is trying to do is be a high street health adviser – a bit like Boots but “much better” – which would certainly give it a new point of difference.

It will be interesting to watch how the stores evolve over the next 12 months. And whether it has its sights set on any other big high street retailers.

READ MORE: Holland & Barrett’s CEO on taking on The Body Shop with its ‘clean beauty’ push

The opportunity of AI

AI might conjure images of robots taking over the world but for marketers it is can offer a real opportunity to free up thinking and improve ROI.

Age UK and RBS, for example, have developed chatbots that enable them to speak to more people. RBS now holds more than 200,000 conversations a month through its chatbot and claims it has helped increase NPS scores by improving customer service and enables its staff to deal with more complex queries. Age UK, meanwhile, has used its chatbot to help with queries over volunteering, and is beginning to use it internally for HR.

Ikea’s foray into AI is Place, an augmented reality app that can put its furniture into people’s homes, cutting out a real area of friction in purchasing new sofas and beds. And Virgin Holidays has used it to improve its email marketing – resulting in a 2% increase in clickthroughs and subsequent growth in revenue.

The key takeaway is that while AI might seem complex, there are a huge array of use cases that can be of benefit to marketers in improving customer service and brand experience. What is important is working out what those use cases might be for your brand and then getting out there and testing!

READ MORE: How AI is helping brands improve the customer experience

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