More neutral language please
I'm stumped why Aldi and Lidl are always referred to as "the discounters" which has a slightly disparaging tone to it. If you're going to use terms like that why not refer to the other supermarkets as "the profiteers"?
As the Christmas trading figures emerged from the big-name supermarkets last month, the outcome of their price war was laid bare. Consumers benefited from falling food prices while limited-range discounters Aldi and Lidl enjoyed their fastest growth ever. However, this war has not been without its casualties. Morrisons …
The cynic in me approves of the use of the term discounters.
Where does Aldi and Lidl's ability to discount further than the big guys come from? Some of it is obviously store location, store fittings, and minimal headcount, but where does the rest come from?
Are they crushing suppliers worse that Tesco et al? Is it subsidised EU imports?
At some point a "Ryan Air" moment will arrive for the discounters, when buyers get fed up with the trade offs - I look forward to it with amusement. Of course if I were Tesco and the others I'd be looking at what Ryan Air did to the Airline industry and cacking myself.....
I can't speak for Lidl, but Aldi seems to undercut competitors by not providing a wide range of choice and not providing branded goods. And as for location, Aldi is actually my closest supermarket *by far*.
Personally, that's not the same as sitting cramped in a crowded craft with 200 promotions an hour (scratchcard, drinks, snacks, lottery, charity donation, etc. etc.) I actually prefer restricted choice and I don't have a strong affinity towards brands either. So for me, it's not a trade off that I foresee getting fed up with. At any moment, if I desire a brand, I can just pop to one of the other big names.
I'm just the opposite. I don't buy generic/house brands. I used to buy one, Walgreen's candy, because they had a type and size that I liked. When they rebranded all of their Walgreen's products with the Nice(R) brand, I quit buying them.
As for store loyalty cards, do you know how hard it is to convince the employees running the checkout lines that you'd like to pay full price, please... Its nearly impossible, and I always request that they remove the discount. I'll continue to be much happier that they are in business at the location than I would be if I save a little money.
I think the best thing grocery (and other) stores have done is inventory control. Instead of ordering on a schedule, the orders get placed when the inventory control system says they need to re-order. Maybe it's me, but I have changed stores permanently after repeated 'not currently in stock' situations. I give them a pass on things like bread and milk when there's an imminent snow storm (I live in Atlanta and have been snow/iced in three times in 15 years.)
Maybe it's me, but I have changed stores permanently after repeated 'not currently in stock' situations
It's not just you my local Asda spends half its time looking like they've just been robbed by an army of "they're not Russian, honest" soldiers, I don't know how they persistently have no products anybody wants, just empty shelves. A few years ago I stopped shopping at the Canary Wharf Waitrose for exactly this problem - to the point I was telling people that if they ever hear Waitrose talking about recession they're just lying; the actual issue was they plainly weren't buying enough stock.
This stuff really pisses me off. Occasionally it's fine, but when it happens every week with the same items you're doing something fundamentally wrong, why are your systems not figuring out this is happening. No Big Data™ needed to solve this one.
Where does Aldi and Lidl's ability to discount further than the big guys come from? Some of it is obviously store location, store fittings, and minimal headcount, but where does the rest come from?
Limited range: to take an example, they sell two types of tinned tomatoes, in one size of each. As opposed to big/small/multipack, with/without basil/oregano, in basic/standard/premium ranges, alongside a dozen branded equivalents. And they sell the same tomatoes at all their stores across Europe. So the volume they buy of either of their two options is massively greater than Tesco achieve with any one of their several dozen options.
Small stores: if you only stock 2,000 items, you need a fraction of the floor size of a supermarket that stocks 20,000.
No frills: simple store layouts and fittings, shelf-ready product packaging, small number of hard-working staff rather than hordes of kids chatting with their mates.
Limited time specialities: they don't stock lobster all year, just maybe twice for a week or so. Then they move onto pheasant (say). So they make large buys of speciality products infrequently, rather than clog up their shelves with slow-moving ranges all year.
These guys aren't stupid - they've got a very carefully thought-through business model, and any conventional supermarket trying to compete with them just on price is going to suffer.
I have a child who is not allowed lactose and gluten. The latter makes her very aggressive and the former causes her to lose control of her bowels. Not life-threatening but certainly worth the effort of cooking lactose-free and gluten-free meals.
As a consequence, I do the bulk of my shopping in the supermarket that has the majority of the things the family needs. My local Aldi and Lidl have a limited assortment of cheaper foodstuffs but not enough to cover the aforementioned child. They are cheaper but multiple trips to supermarkets to cherry-pick what they have is time-consuming.
Another factor is the necessity of a car. We have no car. We have gotten by without one for the last 13 years. I can walk to my local supermarket but I need to drive to my nearest Lidl.
All of these factors mitigate against the large out-of-town stack'em-high-an'-cheap supermarkets in favour of the conventional supermarkets nearby.
On the right track, Zog. 'Discount' implies a reduction of some kind, but Aldi, Lidl don't discount on previously higher prices, they're just cheaper than the others.
In FMCG terms however, it means they purchase goods to sell from the discounter channel. Aldi and Lidl have low prices by buying things that are cheap when they are cheap and selling them cheap. This means that everything in there is cheap, but if you go back every 3 weeks, it won't have the same range of stuff in them.
Tesco/Sainsburys/Morrison tend to keep the same products in stock most of the year, baring seasonal line items.
Its not derogative, it just describes the business model.
I see what you mean but "discounters" in this context is actually considered a legitmate retailing channel by the Food and Grocery industry. In the same way Online is. Its not meant as a pejorative or slight.
Example given here: http://ra.igd.com/Hub.aspx?id=113&tid=11
Because they ARE discounters. They've taken the big box approach, but scaled it down somewhat. Stacks of the bulk cartons instead of proper shelves, no staff for bagging, etc.
My dad shops there because he loves pinching pennies. But the very first time I accompanied him into the store he turned to me and said "You have to check the dates on everything because they don't always remove the expired items." His first job was as a stock boy at the local grocery store, so failure to properly rotate stock irritates him to no end.
Re: removal of expired items.
I have always found Lidl and ALDI very good at dealing with stock close to expiry by stickering it with 30% off a day or two before. More than I can say for the T**** Express near me that regularly features ready meals days past their sell by,
Wow. Trying to be politically correct?
Zog, Aldi and Lidl have marketed themselves as discounters. Its their business model.
The truth is that many corporations have latched on to the term 'Big Data' and have yet to truly understand how to use it, or when best to use it.
To use the example of pricing. Amazon doesn't have a physical storefront. The price displayed could be calculated on the fly whereas in a supermarket, you would need to spend $$$ to upgrade the store shelves and the registers to do this. Yes it can be done and the technology is pretty straight forward.
Yet, here's the rub.
What do you buy on Amazon and what do you buy in the supermarket?
Big difference in terms of price margins and when it gets down to price optimization... it doesn't work in the grocery store....
In your neighborhood, there are at least 2-3 grocery chains close to you that you have a choice as to where to shop. You most likely shop regularly at two of the three if not all of the stores based on quality of product, choice of products and convenience. So if your favorite cans of beans is 5p lower at tescos but you're close to Sainsburys, are you going to go to Tesco to save 5p a can?
The issue is that the grocery business is low margins, high traffic. Not a lot of wiggle room. For most of the products, the price optimization within the margins where a store will make money is too small to sway the average consumer.
When you start to put certain products on sale to get customers in to the door, your competitors may match the price (potentially losing money) and will counter with other products where they have better margins or deals with manufacturers and will force you to match and you potentially lose money.
Amazon doesn't sell products that have that small a margin. They aren't selling perishables and shipping direct from manufacturer on some products, they can reduce their holding costs. (Again holding perishables cost more because usually they have to be refrigerated or frozen.)
There's more, but in general the cost of trying to optimize prices is going to exceed any tangible benefits.
Aldi's does their discounting, but its more 'old school' and its much simpler math. You can bet your bottom dollar that when they do run a special on product X, its because they got a deal on product X and have some wiggle room.
I wonder if the Chocolate Factory will make a bid for it? All that lovely data already slurped.
Once upon a time I applied for a ClubCard. They rejected me. I was annoyed now I'm happy that I don't have one. I also use Cash a lot more than Credit/Debit Cards for general purchases.
fuck 'em all. We've been avoiding the big supermarkets entirely.
Fresh produce - farm shop.
Fruit - street market
Meat - local butcher
Preserved meats, snacks, canned goods, cleaning products - Lidl
Nappies - Amazon.
To be honest I'm not keen on Amazon but they sell job-lots of nappies very cheaply and deliver for free.
Absolutely fine if it works for you and you have all the outlets to hand. I like shopping in our local Tesco. It's in walking distance, I know the staff and the fruit and veg come from round here.
Lidl is just a nasty shopping experience in comparison. Their stuff might be cheap, but I have to drive there, negotiate TOH's wheelchair through a cramped shop full of bargain hunters and pack my bags at the speed of light. But of course YMMV
The bag packing threw me to start with.
Then my missus explained it to me. You go to the till, put all your stuff on the conveyor, it gets run through, you put it straight back in the trolley. Once you've paid, you go to those big-ass window-sills they have and pack your stuff into bags there. Apparently it's to speed up the tills and it works.
As for the rest you can everything pretty much delivered which is handy with the whole wheelchair thing.
Veg - http://www.abelandcole.co.uk/
Milk/Dairy/Eggs - http://www.findmeamilkman.net/
Meat - http://www.meatpacks.co.uk/
Groceries - http://www.milkandmore.co.uk/home (but support your local milkman! just get groceries!)
I should note that I am not affiliated with any of these companies and don't even use any of their services - we used to get a veg box from Abel and Cole but decided to support the farm shop instead - and this is just stuff I found in 2 minutes' browsing. It may not all be great but anyone can do it.
Anyone can stop feeding the gaping maw of the supermarkets and enabling them to bankrupt their suppliers.
It's up to you.
"Then my missus explained it to me. You go to the till, put all your stuff on the conveyor, it gets run through, you put it straight back in the trolley. Once you've paid, you go to those big-ass window-sills they have and pack your stuff into bags there. Apparently it's to speed up the tills and it works."
Damn right. Hence why three manned tills in Lidl gives you a 3-minute queue whereas ten manned tills in a Sainsbury gives you a 5-minute queue.
I agree with you. Different demographic groups are in play, each with their own needs and it is their right to be different and 'go with their own flow'. Having been laid up with health issues, the supermarkets' internet ordering home delivery service has also been a life saver.
I had poor experience of the discounters/cheap sellers. I have tried them when away from home. They had limited choice, prices that were not great, fruit and veg was not local, fresh looking or very plentiful. If you are driven by budget have a family who can accept limited choices it will work for you. I found them a bit like my time in the Middle East, in the early days there were frequent limitations of stock until the next boat came in bring goods from anywhere in any language to the merchants of the suq. I don't eat lobster or pheasant or similar specials. Where I live their places are further away than the supermarkets meaning extra time and money on travel. I would have to go to a supermarket to get what they cannot supply.
I was checking out the Aldi / Lidl weekly buys. but after nothing came up after about six months I simply stopped looking.
If you have the time, and the local branch of MegaMart hasn't taken them all out, along with a host of other useful specialist retailers that lost their business because they couldn't by for what MegaMart sold for on the top ten best selling products. Amazon have only completed what MegaMart started.
It's worth remembering Tesco's clubcard knows more about you that the government, and should Amazon or Google get that information, well you can guess how much more product spam you'll get.
Tescos clubcard knows less than it thinks it knows about me, I often shop for others on my way home, I pass our local tesco on my commute - it is in the next town, locally here we only have a rather expensive (and small) co op... so the data Tesco hold on me is not exactly accurate for my household, especially as much of my own shopping is done at the weekend, a mix of veg and eggs from the farm stall at the Sunday market, Meat from the farm shop (If I finish early enough to catch them), Asda, Lidl, Poundstretcher and a few bits from Tesco to top up in the week. My fuel save discount at Tesco is mainly from other peoples shopping
When I am away from the area there are specific items I pick up from Sainsburys or Morrisons as we don't have branches locally.
Big Data doesn't know as much about me as it would like simply because most of my shopping is done with cash in stores without loyalty cards, and some of that is down to a dislike of the current thirst for data about every aspect of our lives. In the UK we suffer way too much intrusion and surveillance of our every day lives. Its time to take back some turf for ourselves, especially as those making these decisions are the same ones that expect privacy & confidentiality themselves.
> You live in the city and you didn't convert your building's flat roof in to a food plot to help with the environment?
No, I live in a little village which is bad for broadband but great for my little boy learning about how food works and what lives and dies. Not as effective as the farmer's boy childhood I had but it lacks the poverty aspect so on balance it might be better.
I can't get skinny jeans past my calves and I do not have a beard or need glasses so I fail at "hipster".
(Upvoted for amusement value anyway)
leading to price displayed varing dependant who is in the vicinity.
Could this lead to 4 pass shopping?
Pass 1: with smartphone switched on, record the prices shown.
Pass 2: with smartphone switched off, record the prices shown.
Pass 3: with smartphone switched off and wearing a Fawkes mask, record the prices shown and pick items.
Checkout: use photo of lowest price, pay cash.
Ok, ok, I'm going, mine is the one with cash in the pockets.
I'm not convinced ESL will happen any time soon, at least not in the UK. It may be that a significant seismic event will shock the big four into using them but the apparent relentless march of Aldi and Lidl still hasn't caused that (although that appears to be changing).
This ESL tech has been around for at least 12 years - yet in the UK they still pay flesh sacks to change the paper tickets on the shelf ends. In the distant mists of the past I looked at a project to design ICs for the displays, which got canned due to a lack of demand.
I have a funny feeling that rather than build loyalty with up to the minute pricing, variable pricing will will just royally piss off shoppers like me who will view the ever changing prices through rather cynical eyes. Among other problems - how do you placate shoppers upset that the price was lower when they put the product in their trolley?
For about 3 years now, MrsJP and I have used 2 folding crates we keep in the car. Usually one is enough. Unfold, put in trolley, and fill with goods. Get to checkout. Remove delicate items manually, then unend the crate onto the belt.
Total loading time <30s.
Then put crate back in trolley, and fill as operator scans. Be prepared to wait while you do this - you can pack faster than they can scan.
Occasionally 2 crates are used for a big shop. Or, if you want to use the self service tills, it's 2nd crate on packing area, and transfer from trolley to crate (scanning as you go).
Still weirdly minority behaviour, from what I see, despite the fact my Mum was doing it 25 years ago.
"...... retailers can be more responsive, allowing consumers to benefit from promotions in near real-time. If consistent price is fundamental to building trust with consumers, this has got to be a good thing."
This suggests that the object is to offer "consistent price" by your friendly supermarket - nah, sorry I just can't agree with that conclusion at all. What I do see, here and now, is ongoing price adjustment by the likes of Tesco et al in order to set the item cost to the maximum that a particular location will support, (and then occasionally reduce the price in a "special offer") it's one of the things that drives us to shop at Aldi for all the basics as you tend to pay the same price as the previous week. I would suggest that this will be the reason for the rapid introduction of ESL (in addition to staff costs savings etc) and imagine that it won't be long after that an algorithm will automatically make the necessary changes (upwards where possible) - yes, its a "consistent price", it will be the consistent maximum that it thinks you will fork out for.
A retailer friendly article indeed!
Here's a free pricing tip for any supermarket that wants my custom back. Forget the loyalty cards and price matching. Cut out the practice of jacking up prices on one-off items, then selling them at the proper price only if 2 or 3 are purchased at the same time.
As for price matching - why would I go to X who offer to price match Y and then give me the difference as a voucher or points which can only be spent at X and maybe only within the next few days. Thanks, but I'll go to Y and pocket the difference in cash that I can spend when and where I choose.
Same for loyalty cards, all they do is stick the prices up by a little all across the board and then let the customer get it back by always shopping there. I find it pays to be disloyal.
Exactly. It's all bollocks, as you would expect since the article is full of puff from the people who want to charge hundreds of thousands for noodling about with data driven pricing 'strategies'.
The disease that has infected the British supermarket sector is the idea that if only they spend enough money they can come up with 'magic prices' that will con customers into thinking they are getting stuff cheaply while still keeping a fat mark-up.
For the customer that means masses of cupons and complicated ever-changing offers as the retailers try to work out the tightest possible intersection of what you can be persuaded you want to buy with what they are willing to sell at reduced margin, while avoiding giving away single penny of 'unnecessary' discount. Forget your wad of vouchers or your 'loyalty' card and suddenly the cost rockets.
That's one of the reasons Lidl and Aldi are doing so well. Low prices to everyone - no loyalty card, no vouchers, no expensive pricing consultancies, nothing. Pick it off the shelf and pay for it, done.
The only compelling promotion for me at the moment is Tesco fuel save. Taking 8p off the already dropping petrol price, got me fuel for under a pound a litre for the first time in donkeys years. What a novelty seeing the litre counter go up faster than the pence counter on the pump!
Aldi is small in comparison to normal grocers, but has expanded their selection a lot from the old days. I have been shopping there for 30 years, and in the old days they didn't even have barcode scanners. The employees had to memorize the prices of everything they sold. Once they got the scanners 10-15 years ago, they started carrying a much bigger selection.
Big is not the same as valuable. Just because you know your customers does not always mean you understand them or can manipulate them, in other words it is not always actionable. Tesco's meltdown, despite their loyalty card prowess, and the fact they are willing to ditch the alleged Big Data Crown Jewels, indicates they now agree.
Talk like that is the reason I don't have any "loyalty" cards and pay for my groceries in cash.
Tesco's strategy used to be "pile it high, sell it cheap" and it used to work well enough. I'm sure their policy of snapping up all the prime sites for out-of-town stores at a time of cheap petrol and rising aspirations had a great deal more to do with their period of massive growth than their much-vaunted ClubCard analytics. Correlation is not causation, and so forth...
"Pile it high, sell it cheap" is still working fine for Aldi and Lidl, without any customer knowledge whatsoever. As I'm sure Jack Cohen would have agreed, sometimes is pays to listen to the barrow boy and not the bean counter.
yet somehow or another they still don't get it when I tell them
"You need to carry Tropicana orange juice in the six-pack single serving box." This isn't optional and it isn't for me. Roomie grabs one each morning as part of the breakfast he eats during the hour long drive to work.
I know, I know. Not something you Brits come across all that often, but I expect the underlying problem still exists and expresses itself differently in your country.
While there's lots of reasons and the big one being profit and possible monopoly for the market that survives, there will be lots of damage.
1) Suppliers. As suppliers are pressured to cut prices until they go bust, who or what takes up the slack? Cheap is not always "good" in the sense that products get adulterated or processed to the point of useless. Will this start or deepen the trend to offshore and import everything we eat?
2) The stores themselves. For customers, it will come down to only having the superstore type of facility in dispersed locations. You'll be driving more, putting up with larger crowds.
3) Farmer's markets are good, but you have to live close to the source. Imagine being in, say a London or New York city and trying to find a farmer's market. The farmer's won't bother with the travel times, fees, etc.
4) Choice. As the stores close and go bust, choices are reduced. If it's a monopoly situation, with one store in a given town, you either take what they offer or go to a lot of trouble to get what you want and need.
5) Price. Once the market shakes out and many of the players have disappeared, the remainder will raise their prices as high as possible since there is no competition.
Whatever happened to the belief that you provide goods/services, make some profit and the market is big enough of places to thrive? It seems that the greed to be the most profitable, the biggest supplier (or the only one) has driven things to this. The outcome will not be good for any of us.
Farmer's markets are good, but you have to live close to the source. Imagine being in, say a London or New York city and trying to find a farmer's market.
I grew up in East Anglian countryside, on a farm, surrounded by farms and farm shops.
Its 50x easier to find a farmers market in London than it is in the countryside, because "farmers" (traders) like to come to areas where there are lots of people, and not lots of farms - its good for the margin.
There are traditional, established markets like Peckham, Walthamstow and South Ken, but there are also irregular artisanal farm traders setting up shop all over the place, eg in Stratford shopping centre on a Sunday, the regular market is replaced by "french"* farmers.
* mostly from Kent.
"The number of food producers going bust has increased dramatically as supermarkets squeeze producers in the quest for greater profit, according to accountancy firm Moore Stephens*. 'The supermarkets are going through the bloodiest price war in nearly two decades and are using food producers as the cannon fodder,' said Duncan Swift, a partner at the firm. It’s easy to see the battle as one of price, something described as a race to the bottom as supermarkets cut, undercut and cut once more."
I have something of a philosophico-semantical objection to the italicized passage because, according to the situation as described here, the supermarkets don't seem to be striving for "greater profits", they seem to be cutting prices *and* profits as much as the goal of "staying in business" will permit. That's what makes it a "race to the bottom" isn't it? It's not as though they are *shifting* the burden of lower sales prices to the producers as it is sharing the pain of lower revenue to the greatest degree with those producers.
*Note please that the statement from Moore Stephens is not a direct quote; it seems to be the story-writer's characterization.
There's nothing new in price wars, just maybe the ferocity. I was working for 2 major supermarket fruit and grocery suppliers in the early and min 90's. If Sainsbury's were on doing a quality visit, for example, then Tesco were not permitted on site or JS (as they were known to us) would simply walk away and re-book the visit and we'd have to jump through hoops again. Same with M&S, although not quite so bad. It was out-and-out war. We used 'big data' then too, nothing new there - just the name and method. Ran our systems on old-style pre-Linux Unix - never had to reboot anything for years at a time. And the big 3 were squeezing us then too. If there was a promo on for example, we had to take the hit. They really do have too much power.
Lidl and Aldi are continental brands and a lot of the stock is therefore continental. We have one of each not far from us, and TBH from our point of view, they seem to have a lot of what we don't want or need. We visit mainland Europe a fair bit, and same there. OK for the odd thing but not our weekly shop. What really annoys me about Aldi - bit OT here - is paying a graduate with zero experience £41k to start, when teachers, police, firemen, nurses and other professionals who have been in their jobs for years in positions of national trust are getting nowhere near that. Even GCHQ pay way less than that. It's up to Aldi what they pay, I know, but there's a slight mis-match here. They're a supermarket for goodness sake! Not exactly a a life-or-death job.
I shifted to Aldi for a few reasons :
1. They're cheaper (a lot)
2. I think overall their quality is superior (the Chicken doesn't appear to have been soaked in water for 3 months to boost it's weight) & they've shown (at least to me) that brands are not always better.
3. I got tired of the buy 6 punnets for the price of a 1 or yo-yo wine price "offers" that made me wish I'd brought a calculator on each shop
All this lost my trust
I just hope our UK grocers take this kicking on board and fix things
Put simply, the quarterly massive mailout of vouchers are the single biggest driver of footfall that Tesco has. Their whole supply chain is geared towards it. On top, people spend the "extra" money on high margin items like an extra bottle of wine, not more potatoes.
It's astonishing Sainsbury's didn't get this, and instead went with Nectar points.
Sure, Dunnhumby did some clever stuff with which discount vouchers to mail and how to tailor the range in each store, but that pales into insignificance compared to the quarterly bonanza of the vouchers.
I think Tesco's problem is, as often, corporate hubris. "Retail is detail" as James Gulliver (Safeway) said, and Tesco forgot that. They also got stuck in the middle between discounters and Waitrose/M&S.
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