Expectation Gap

Sainsbury’s results last week seem to be more evidence that the food retailing bigwigs are feeling the pressure to change their paradigm. Netto entering into a joint venture with Sainsbury’s themselves; the continued growth of Aldi and Lidl, both through expansion and new sites and organic growth – attracting those ‘middle ground’ shoppers who traditionally would go to solely one of the big 4. The day after their results, Sainsbury’s announce that because it’s getting tough out there, they will invest a further £150m in price discounts: £150m lost in the fight to defend their distinctiveness, their differentiation.

Of course the price we pay for our food is a major concern. But moving retail strategies towards a price orientation demonstrates the lack of confidence leaders have in their brands – and shines a light on the real problem that needs fixing.

The experience a retailer offers is part of their customer’s value equation, even if research reports say otherwise. Take dairy: this is a category full of rich and evocative pastoral images. In a recent project, we built a mental collage with consumers of what dairy meant to them. Here was the picture that was constructed: standing at the top of a verdant green hill, the leaves of an oak tree overhanging, you look down into the gentle ‘V’ of interlocking hills and there, nestled in the distance is a farmhouse, with smoke gently drifting up from its log fire. A farmer slowly chugs across a field into a vintage tractor, and cows, ready for milking, amble through the farmyard. The farmer’s wife calls to her children who are catching butterflies in a nearby field.

Utter fantasy of course, yet…not. Consumers think of dairy as full of goodness, heavenly food in fact, enjoyable eating, reminding them of good times and nutritious. Yes, they are aware of the high fat content and equally aware they shouldn’t over indulge, but these concerns are not sufficient to impact negatively on their positive dairy world-view.

Look at dairy in retail though: it couldn’t be more different. White packs, plastic and shrink wrap packaging everywhere, glaring red POS pronouncing BOGOFs and price slashes, all cheddar beiges, and goats-milk whites. This is a shopping experience that, rather than being full of warmth and happiness, is emotionally and physically cold. This is a shopping experience where the potential of premium pricing through premium experience is lost.

In fact, this is a shopping experience typical of where food retail is heading; it’s happening throughout the major supermarkets as they wrestle with the no frills approach of the discounters. In turn, the retailers pressure their suppliers for a category growth agenda because they don’t know what to do. The truth is, to not understand how the brand or category exists in the consumers minds is a major risk – commoditising the shopping experience puts you at peril. It is no surprise that at the premium end of the market the retailers are more confident in their approach. Waitrose is the oft cited example, but another, smaller retailer embodies this consumer understanding more than most. Up in the north, with stores in places like Milnthorpe and Garstang, you possibly wouldn’t expect a retailer to be thriving with this approach, but Booths is.

Booths storeI recently went to their Windermere store in the old railway station and it was a delight. This isn’t just a retailer who operates the hackneyed old stereotypes like ‘get fresh near the front’ or wafting the smells of fresh bread throughout. It does these things of course, but with thought and panache. Artisan breads were laid out on a table, with short descriptions of what they contained, how they were baked, what they’re good with. The delicatessen didn’t just feature bowls of olives but also great northern standards – a pie range to die for, more sausages you could shake a pig at, it catered for everyone not just middle class Mediterranean-diet wannabes. Beer wasn’t laid out by type, but by region, with a big focus on local. Local suppliers were the hero everywhere in fact – Goosnargh Ducks, Mrs Kirkham’s Lancashire Cheese and inevitably crafty crisps featured with point of sale showing, who made them, where, when and why.   This was a food retail experience much closer to being romanced like in a luxury car showroom, the Apple Store or a great bookstore. This was a retail experience where more clearly than any other there seemed to be a partnership between supplier and store. And oh, look, they’re doing very nicely thank you.

Commoditising price is one thing, but commoditising experience? Well, that’s a trap you’ll never get out of.

Slide1David Preston is founder of The Crow Flies, a research, strategy and innovation company that works with shoppers and consumers to help brands find a direct route to long lasting success. david@thecrowflies.co.uk; +44 (0) 7885 408367; www.thecrowflies.co.uk; @crowflieshigh.

© The Crow Flies, 2014

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