Maintaining a presence on the shelves of discounters means cutting prices and margins, or making a compromise on the size or quality that your product offers. So how can you win big in both channels?
You have to hand it to the discounters. Once shunned by mainstream shoppers, the UK’s discount channel, led by the likes of Aldi and Lidl, now represents the biggest growth opportunity in the grocery market, accounting for one in every £8 spent on groceries. In Germany – whose discount channel leads the world – more than 40% of grocery shopping is now done at discounters, and the UK looks set to follow, with Aldi’s penetration overtaking that of Waitrose in 2017.
While the traditional grocery stalwarts are struggling, the discounters have gone from strength to strength. Their strategy? To spend big on advertising in all the right locations, aggressively targeting consumers’ weekly “big shop” with a clear message: breadth of range, consumer convenience and value for money.
All of this is fantastic news for the discounters themselves, but, given the brands they stock, it creates a challenge for higher-tier names.
Maintaining a presence on the shelves of the discounters means cutting prices and margins, or making some kind of compromise on the size or quality that the product offers. For many big names, this just isn’t sustainable – especially if the same brands are on sale for more elsewhere. This leads to trade strategy challenges, uncomfortable conversations with other retailers, and penetration losses as shoppers switch channels.
So how can big brands share in the success of the discounters without reducing margins, devaluing their own product ranges or jeopardising their relationships with other retailers? The Happen team have the answer: value innovation by consumer insight specialists, not accountants.