A report that discount supermarkets Aldi and Lidl could be on track for combined sales in excess of the UK’s fourth-biggest multiple – Morrison’s – together with news that has posted double-digit rises in full-year sales and profits, boosted by the opening of 32 new stores, reinforces the view the rise of the British savvy shopper is complete and that brands need to understand quickly what motivates their purchasing decisions.
That’s the warning from Bridgethorne, the category and shopper management specialist, which says that suppliers still need to gain better insights and demonstrate to retailers that they have a clearer understanding of the power shift that is taking place within the retail market and how this affects the likely success of their own products.
“There are two issues at play here,” said John Nevens, co-founder of Bridgethorne. “The first is the changing nature of shopper behaviour. The rise of the discounter has less to do with demographics and more to do with shoppers exercising their determination to shop where they feel they are going to get the best deal. For suppliers and retailers alike, this means understanding the factors that influence the shopper’s decision to purchase – whether that’s price, convenience, brand loyalty – and at what point on their path to purchase that decision to buy is either made or influenced.”
Aldi and Lidl have consistently bucked the industry trend by ranking among Britain’s fastest-growing supermarkets . Aldi says it is set to spend £400m in the UK over the next 18 months. This will include opening up to 55 new stores this year, and extending about 30 others. Aldi is also refurbishing stores to expand its range of fresh foods, including more ready meals, prepared salads and delicatessen products. It will hire up to 10,000 staff this year and increase the number of tills, trolleys and carparking spaces at its stores.
But, says Nevens, suppliers need to share their own insights if they are to share in the success of these retailers.
“If you understand what motivates shoppers to buy where and in the manner that they do, suppliers can use these insights to help retailers – discounters and others – to develop categories in line with shopper requirements,” adds Nevens.
“Effective category vision and strategy should always focus on the major drivers and tactics that increase value and volume. It should be underpinned by consumer and shopper research, and data-driven insights that allow the retailer to take advantage of the manufacturer’s expertise in category development in order to drive incremental sales.”
In such circumstances, Nevens adds, relevant insights must inform the creation of a category vision and strategy, which can be shared internally within the supplier organisation but also by the supplier with potential retail trade partners. These insights can be deployed in planning to influence every element of commercial activation.
“The kind of in-depth category understanding which leading brands will have been able to share with retailers will have cemented their position as a trusted partner in the pursuit of incremental category growth. It is incumbent on suppliers across all product sectors to adopt the same approach to their category development activities,” adds Nevens.
Understanding the point of purchase interface is critical to success. Bridgethorne helps suppliers understand both the product’s & the shopper’s journey to the point of purchase and what motivates their purchasing behaviour. Only insight like that can assist suppliers in developing strategies for shoppers, whether they buy at discounters like Poundland or other retail outlets.