ASDA Joins Rank With Tesco To Report Its Worst Result Ever…

…Which Supermarket Will Be Next?

ASDA in trouble reporting it worst sales ever!

ASDA in trouble reporting it worst sales ever!

Last quarter Tesco reported its worst result in its history.

This quarter, it was ASDA’s (UK Walmart) turn to report it worst result in 50 years.

      The other two supermarkets that make up British big four supermarkets are not doing well either.

They are as bad as Tesco and ASDA.

 

So what is responsible for British big four supermarkets woes?

      If you were to ask the CEOs of those supermarkets, they will blame the ‘damn Germans’: Aldi and Lidl.

According to their narrative, Aldi and Lidl are eating into their market share because of price.

      Consequently, in a bid to match Aldi and Lidl pound for pound, the big four supermarkets have declared price war.

      Not only is price war a very bad business strategy that produce only losers, their decision to focus on price ignores the fact that there are other variables underlying the success of  Aldi and Lidl.

      Like most retailers, UK’s big four supermarkets are avoiding key factors responsible for Aldi and Lidl eating into their market share.

      If price was the key determining factor in shoppers decision to choose Aldi and Lidl over the big four supermarkets, they would have gone to the pound or 99p stores.

Or they would have done their shopping online.

No retailer can be cheaper than the internet.

Prices is the least of the reason shoppers choose one retailer over the other.

      Shoppers choose Aldi and Lidl over the big four supermarkets because they sell reasonably priced products made in Germany.

It is the ‘Made in Germany’ that is the selling point for Aldi and Lidl.

      Just as China is associated with cheap crappy products, Germany is associated with quality products.

 

How Can UK Big Four Supermarkets Take On Aldi and Lidl?

supermarket price war

British supermarkets declare price war

 

      As I have stated earlier, not only is price war bad for any business, it is especially criminally stupid to fight price war in the retail industry where margins are razor thin.

Hence the reason for their bad results. 

 

How can a business make profit when it give away its products for 50% below cost price?

      So…in the absence of price, what else can British big four supermarkets do to bloody the nose of the ‘damn Germans’?

To answer this question, let’s borrow some words of wisdom from Eli Goldratt:

“Options, service level, guarantees, response times, etc. can change market perception of value of the same physical product or service”.

      There are lots of compelling offers the big four supermarkets can give to shoppers that will not require them giving away their merchandise for peanuts.

For a start, they need to return to the fundamental strategies of retailing.

Visual Merchandise display

Beautiful store design & attractive visual merchandising are the key to increasing retail sales

I constantly augur in my writings on retail sales that in order to increase retail sales, a retailer needs:

  • Beautiful store design
  • Attractive visual merchandising display
  • Effective loss prevention strategy

      To create a beautiful store design and an attractive visual merchandising display, retailers need to ask themselves three simple but essential questions:

 

Who are they trying to attract (Their target audience?

      The majority of retailers do not even know their target audience. They just open their stores and hope that shoppers show up.

      You cannot design a beautiful store or create an attractive visual merchandising display if you do not know who you are creating the design for. 

 

What are they going to sell to them (Their offers)?

      Shoppers do not go to retail stores to buy the crappy made in China produce, but the experience of buying the products.

      What experience do the four big supermarkets have in their stores to dazzle shoppers that will entice them to visit their store?

 

How are they going to sell to them (Their Media)?

What methods are they going to use to attract shoppers into their stores?

      Retailers now operate in an omnichannel retail environment that includes: online, mobile app, etc.

How many touch points do they have with their target market?

      Most importantly, how do those touch point integrate into their overall marketing and business strategy?

 

Do They Have Effective Loss Prevention Strategy?

Loss prevention is not simply about shoplifting or employee theft. It's about product availability

Loss prevention is not simply about shoplifting or employee theft. It’s about product availability

Retail loss prevention is the most misunderstood function in retail.

Most retailers view shrinkage as simply shoplifting and employee theft.

      As a result, their loss prevention strategies are geared towards apprehending individuals suspected of theft.

But loss prevention is the core of retail marketing.

Shoppers cannot buy when stock is unavailable.

This is marketing 101.

      Consequently, if a retailer does not have good stock control, replenishment or supply chain system, they are toast.

When you have a good loss prevention system, you reduce missed opportunities, boost sales, enhance in-store experience and increase customer satisfaction.

      If the big four retailers are looking for ways of crawling back market share from Aldi and Lidl without engaging in bloody price war that produce only losers, I have just laid out a roadmap for them.

That is if they do not enjoy producing bad results.

If there is one thing they take away from this article, let it be this:

“Options, service level, guarantees, response times, etc. can change market perception of value of the same physical product or service”.

 

supermarket price war

It’s criminally stupid to engage in price war and expect to be profitable

Instead of giving away their merchandise on the cheap to generate sales, there are lots of other compelling offers they could give shoppers to entice them.

What exactly?

Should I give that info away for free too? 

I am not Oxfam mate sorry. 

There is a phone number at the bottom in case you are interested!

 

 

 

# # # #

       In this fiercely competitive retail environment, the tiniest of things can make an enormous difference to your sales and profit margin.

      Click on the links below to gain instant access to your ‘How to Increase Retail Sales’ Swipe Files so you can start increasing your sales and profit margin:

http://romeorichards.com/leadgenerationfunnel/

Call 020 8798 0579 or email: info@theprofitexperts.co.uk for a FREE strategy session.

 

 

 

Small Business Growth & Marketing Consulting Agency London

Small Business Growth & Marketing Consulting Agency London