With more start headlines from Tesco this week, it would be easy to jump on the bandwagon and say ‘I told you all along. Those supermarkets are rubbish. They’re getting their comeuppance’. Of course, they’re neither rubbish, nor are they due a comeuppance. They have transformed most of our lives for the better. My mum and I were reminiscing recently and the topic of the food shopping came up: we had to drive 8 miles to go to a little shopping centre that simply wouldn’t pass muster today: a dour retail experience, not that cheap and certainly not that ‘super’. A few years’ later at University, studying in a biggish city down south, I encountered my first proper, out-of-town, Sainsbury’s. It was a revelation, staggering. And for fear that I paint a picture like it was Victorian times here; this was the late ‘80s. (1980’s, thank you, before you say)
But here’s another staggering fact. The average discounter stocks 3,000 product lines. The average supermarket? 40,000 to 55,000.
The rise of ‘every little helps’ – and by this I don’t just mean Tesco, but a grocery retail platform built on offering even more products, even more categories, from ever bigger stores, whilst beguiling at first, has brought with it the brand killer: complexity.
Killer? Too strong? No.
Consider product lines in a mid sized supermarket. 40,000 stock keeping units. Break this down: the supermarkets rarely stock a brand’s full range. They rarely stock the full availability of product formats, or packaging types. Consider: seasonal lines; limited edition runs; When It’s Gone It’s Gone lines. Consider: gondola end buy-ins, secondary siting units. Consider: in store activity; trial mechanics. Consider: the supply chain alone to get all these products, so that they are in store all the time to a perhaps over 2000 stores. Consider the impact of promotional pricing: the associated paperwork to get it set up on systems; the stock build up; the management of stock post event and the clearing up all the price mismatches months after.
No, there is little doubt, complexity is killing the retailers.
But, there’s also the change in shopping behaviour. My gran used to get my granddad to drive her, at least 4 times a week, often daily (Sunday’s excepted of course) into town. She’d work her way round the shops. Wakefield’s the butcher; eggs from the stall under the arches of the town hall; maybe some oatcakes from Browns inside the town hall; fish from ice-banked counter of the fishmongers which you could smell from the top of the street, Chatwins for a cream cake. And so it went on. How, years later, we would scoff at such antiquated and inefficient nonsense. Shop every day? Pah! Shop in more than one store? Madness!
The circle is coming round though. Inter-linking agendas, from supporting local, to food waste, to the pressure on time, to food trust, to the vanquishing of our high streets are seeing a return to some of the ‘old’ ways. Nowadays our family does a main shop with little top-ups or embellishments. Meat from the butchers, not the supermarket counter. Fish from the Monday van from Grimsby. The Co-op for fresh bread. Blimey, even the milkman has re-entered the mix.
It’s not just grocery: McDonalds’ are cutting back their range to ‘…let customers…quickly understand their order’ and because, ‘80% of our sales come from a small subset of the menu’.
And there’s the growth of the specialist, especially on-line. ASOS, Wiggle, Beer Hawk. If you want complexity, there has to be simplicity elsewhere. Want a crazy range of bike tyres? Go to Wiggle (or Chain Reaction) and get them. But want to buy books from there? Shop elsewhere young man.
The reality is that one major reason for the current stellar growth of Aldi, Lidl and even, say Poundland, is simplicity. Exploiting a niche and operating a simple business model. 3,000 lines. No up and down pricing. Less range. With a price that makes up for the (relative) lack of choice.
Whilst Tesco, Sainsbury and the likes are learning the lesson the hard way, the truth is, there’s a lesson in this for all brands. Simplicity and focus is the way to scale. Decomplexification we call around round here, in an ironically un-simple way.
David Preston is founder of The Crow Flies, a research, strategy and innovation company that helps brands find a direct route to long lasting success. firstname.lastname@example.org; +44 (0) 7885 408367; www.thecrowflies.co.uk; @crowflieshigh.
© The Crow Flies, 2014