retailer strategies in economic downturn

8/3/2019 Retailer Strategies in Economic Downturn

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Marketing in an Economic Downturn

Retailer Strategies in Economic Downturn

Unilever Marketing Academy

March 2009


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UK


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Annual Till Roll Totals Expenditure Trends

14

12

10

8

7

6

5

4

2

2

2

Total Hard Disc

Iceland

Morrisons

Asda

Tot Grocers

Tesco

Sainsbury

Waitrose

Total Co-op

Somerfield

Tot Indepts

52 w/e Nov 30 2008

y/y % Change

Cheaper retailers continue to do well

Source: TNS

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RST Store Price Index vs. Sales Performance

12weeklyRSTsalesgrow

th

-5

0

5

10

15

20

25

30

35

0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7

Price Index12 w/e 28 December 2008

Tesco growth now tangibly below the average, whilst

Discounters continue to press aheadPLACE
http://www.somerfield.co.uk/site/home/index.asphttp://www.waitrose.com/index.asphttp://www.netto.co.uk/internet/nettog/menu/main.nsfhttp://www.armaghonline.com/uploads/lidl.gif


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With a clear movement to the value end of thespectrum continuing

Tesco

Asda

Morrisons

Sainsburys

Aldi

Lidl

Iceland

WaitroseM&S

Somerfield

Source: TNS - RST (grocery) 12we 30 Nov 2008 (TNS P13)

-ve

-ve

Significant (top 20) grocery switching flows

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TescoUK

Tesco, the UKs largest supermarket chain, has tackled the issue of financial doom and gloom head onover the past few months. Although it is still running TV ads for its non-food lines, out have gone thequirky and bright TV activity for its food offering with much more emphasis placed on press, poster

and internet activity.Carrying the bold slogan Britains Biggest Discounter, which has much more prominence than the

longer running Every Little Helps, recent marketing has made numerous highly topical direct

references to the situation. Selected ads for food have been accompanied with the headline Fish

And Cheap; Own-label ketchup with Price-Squeeze; Dishwasher tablets with Wash. Dry. CleanUp and for nappies with Its All About The Change. Such an approach can also be seen in its ads

for non-traditional supermarket lines (electrical, audio-visual etc) and although this is not a drasticchange from activity a year ago, it is evident that the brand wants to convey a feeling of

understanding with consumers at a time when financial issues are ubiquitous.

They are now pursuing a comparative pricing approach, comparing themselves to the other big UKretailers.


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Britains Biggest Discounter PLACE


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When inflation was running high (mid 2008) they respondedaccordingly

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9/64Source: Xtreme Insight Communicating in a Downturn Nov 2008

Click to play

This Tesco ad before Xmas 2008, shows a clear and simplepricing strategy

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COPYUK 25/01/09At Tesco, we

compareprices onthings ourcustomers

actually buy.And on

Friday 9thJanuary,

over 1.1mcustomers

baskets werecheaper atTesco. AndAsda, wellyou can

judge foryourself.

Real basketsat Tesco.Every little

helps.

Click to play Click to play

After Xmas, they are now copying Asdas comparative

messagingPLACE
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They have run an aggressive campaign online in which itshows you the cheaper alternative to your original choice

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It has been advertised on TV

COPYUK

Tesco.comweredetermined to help youspend less. Thats why

when you choose a topbrand online, well

suggest a cheaperalternative. Makes sense

to uswell we dontwant you seeking acheaper alternative

elsewhere.Tesco.com every little

helps.

Click to play

It has been advertised on TV which it shows you the cheaperalternative to your original choice

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The Discounter brands share within Tesco has settleddown after moving out of Power Aisle

0.0

0.7 0.8

1.0 1.0

0.8 0.80.7

w/e 14 Sep w/e 21 Sep w/e 28 Sep w/e 05 Oct w/e 12 Oct w/e 19 Oct w/e 26 Oct w/e 02 Nov

%o

fTescosalesfrom

discountbrands

Source: TNS - RST (grocery) 4we 02 Nov 2008 (TNS P12)

Average share for the 4week period = 0.8%

Weekly build of share of total sales in Tesco

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Th h i i b d d d t bi


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The share gain in branded products was biggercompared than the Discounter brands, with key losesfrom standard Own label

5.3

0.0

36.0

3.4

5.4

47.2

2.8

6.3

0.6

34.3

3.5

5.3

47.5

2.5

6.2

0.8

33.4

3.3

5.0

48.7

2.6

Value

Discount Brands

Standard

Finest

Other (Organic etc)

Branded

No Brand Name

% value share of sales in Tesco

4 w/e 07 Sep 08 (pre discount brands)

4 w/e 05 Oct 08

4 w/e 02 Nov 08

+0.8%pts

-2.6%pts

+0.1%pts

+1.5%pts

own

label

Source: TNS - RST (grocery) 4we 02 Nov 2008 vs previous 4wk

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For traditional supermarkets, trading down shoppersthrough Private Label can be a risky strategy

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AsdaUK

Why pay More? is the slogan adopted by Asda over the past few months as it battles with the

likes of Tesco and Morrisons for market share in the lower-to-middle UK supermarket sector. Asdahas consistently put its competitive prices, potential savings, and comparisons with rivals at the

heart of its marketing, a strategy it is continuing to use during these troubled times. It has also nowstarted to focus more on community and family. Examples of the former include more localisedactivity citing offers and improvements to your local stores, while ads highlighting price cuts on

joints of meats encourage family gatherings and get togethers. Emphasis has also been placed onfeeding your family for less an approach used by almost all the UK supermarket chains. While

there are no direct references to the credit crunch, selected press ads feature the strapline Winner

of Britains Lowest Priced Supermarket Award 11 Years Running.


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Source: Xtreme Insight Communicating in a Downturn Nov 2008

COPYUK

Winner of Britains Lowest

Priced SupermarketAward 10 Years Running

Why pay more?... PLACE


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Competitive prices PLACE


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COPYUK 16/01/09

It can be difficult to knowwhich claims to listen to.

So its reassuring to

know my supermarketdid an independent pricecheck on all comparable

products including milk,eggs, meat, fresh fruitand veg. And on Monday

they found that onaverage Asda were

cheaper on this manyproducts. Tesco, well

judge for yourself. Asda,saving you money

everyday.

Click to play Click to play

Comparisons with rivals

Going into 2009, Asda continues on the theme ofPrice sparking a new price war with a 1,000 price

cuts

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More localised activity PLACE


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SainsburyUK

Feed your family for a Fiver, Switch and Save and Love your Leftovers are three main

campaigns Sainsbury have employed. Sainsbury has dropped celebrity chef Jamie Oliver, at leasttemporarily, to feature a working mum struggling to feed her family. She also works in the store.


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This ad has a dual message of Feed your family for a fiver with the cook in the house using

Sainsbury value lines, alongside a message of the pork they use being RSPCA (animal welfare)approved. A quality plus price message from Sainsburys.

COPYUK 29/01/09

Daughter FVO: Dad, wecould compost that.

Recycling. Oh dad, whatsort of pork is it?

Dad FVO: Pork from apig pork.

Daughter FVO: AhhhOK, its Freedom Food

endorsed,Super: Our Freedom

Food endorsed pork is

reared to RSPCAendorsed standardsDad FVO: Nice? MeganThompson endorsed is

it?

Click to play

Feed your family for a Fiver PLACE
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Feed your family for a Fiver PLACE


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Sainsburys also talks about switching to their Basics range but makes a point of the meat and fishbeing Freedom Food approved a quality with price message.

COPYUK 03/01/09

Dad FVO: Ohhh salmon. Not

exactly flush this month arewe.

Mum FVO: Well you know youcan get cheap cuts of meat,

same with fish, sort of.Super: Switch and Save withbasic salmon fillets. They are

Freedom Food approved.Mum FVO: Careful, its hot.

Dad FVO: Mmm that lookslovely. What are we having

tomorrow? Caviar?

Click to play

Switch and Save PLACE
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PLACESwitch and Save


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Has Switch & Save worked for Sainsburys?

Sainsburys has managed to increase footfall and

market share since start of Switch & Save (Sept 08) The mechanic has allowed them to run an effective media

campaign

Own Label has grown but brands have been the driver

of Sainsburys growth.

In Jan 2009 Sainsburys have

tweaked their S&S campaign totalk about their Basicsrangewe will be monitoring this to seeif this will continue the increasedfootfall or devalue sales?

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COPYUK 10/01/09

Leftover chicken it just

needs some love. Readyrolled puffed pastry,

Sainsburys pesto and

tomatoes. Mmm loveyour leftovers.

Click to play

PLACELove Your Leftovers

A Love Your Leftovers campaign has been running on TV and online for over 6 months
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A Love Your Leftovers campaign has been running on TV and online for over 6 months

Love Your Leftovers PLACE


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On line activity PLACE


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MorrisonsUK

Widely acknowledged to have won the supermarket Christmas war in the UK they also took astrategy of simple price which has continued into the New Year

Morrisons have celebrity endorsements talking about


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Morrisons have celebrity endorsements talking about

quality and a clear Price Crunch message is working wellPLACE


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MorrisonsXmas Half Price Dec 08.movCOPY

UK 26/01/09Youll always find great low

prices at Morrison's. All thisfruit and veg, just 50p each.

The price crunch at Morrison's.

Click to play

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Morrisons has had great success with new promotional
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PLACEMorrison s has had great success with new promotional

messages


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AldiUK

Interestingly in the UK, Aldi appears to be using these troubled times to reposition itself and targetthose who want to save money yet dont want to compromise on quality when it comes to food.

The German-owned retailer has long been seen as a budget supermarket with price-focused andfunctional marketing reflecting this image. However since 2008 its advertising has changed tack

with more emphasis on its competitively priced fresh fruit and vegetable offer. It has recentlyenlisted the services of celebrity chef Phil Vickery and the brands latest (Sainsburys-esque) TV

initiative sees the chef cooking up tasty delicacies which can feed a family of four for just 7.Ending with the words Dont change your lifestyle, change your supermarket its evident that Aldi

is hoping to subtly entice now-thrifty consumers from the likes of Sainsburys, M&S and evenWaitrose into its stores. Not wanting to alienate its core and loyal consumer base, the brand has

continued with its long standing press initiatives (both ads and inserts) highlighting its competitivelypriced food and non-food lines.

Phil Vickery Dont change your lifestyle change your


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Aldi, renowned for its powerful price discount approach, is now stressing its premium/luxury offer

(such as fresh sea bass) with the end line Dont change your lifestyle, change you supermarket.


COPYUK

Dont change your lifestyle, change your

supermarket

PLACEPhil Vickery Don t change your lifestyle, change yoursupermarket

Phil Vickery Dont change your lifestyle change your


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Click to play

PLACEPhil Vickery Don t change your lifestyle, change yoursupermarket
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However, not abandoning its simple price message PLACE


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LidlUK


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PLACELidl is using simple and clear price messages


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PLACEand it is now strengthening its convenience positioning

Lidl are communicating the quality and value of their private


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PLACELidl are communicating the quality and value of their privatelabels

Lidl are communicating the quality and value of their private


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PLACELidl are communicating the quality and value of their privatelabels


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WaitroseUK

Waitrose is taking on M&Ss 'Dine in for 10' offer, enabling customers to buy two main courses, adessert and a bottle of wine for 10.

Waitrose's offer is almost identical to the M&S offer, which has been running for several monthsand was recently described by its executive chairman, Stuart Rose, as a 'spectacular success'.


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COPYUK 22/01/09

Right now at Waitrose,choose from a selectionof meals for two main

course, side dish,dessert and a bottle of

wine all for 10. Enjoy!

Click to play

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Marks and SpencerUK

M&S, which has a long term messaging and spending commitment to positioning its food firmly inthe premium/quality sector (This is not just food, this is M&S food), is now increasingly stressing

price (e.g. Dine in, two for 10, 3-for-2 Mix and Match) and its famous pre- One day Christmasspectacular sale.

RETAILExample PLACE


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RETAILExample PLACE

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BootsUK

More surprising for a brand so long seen as caring and nurturing and now taking on itslow cost competitor - Superdrug

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Asda

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Continental Europe

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CarrefourFr, Sp, Be

Across the channel, the current economic crisis has thus far hit Carrefour hard in its core Europeanmarket. In its native France, as well as in Spain and Belgium, it has faced increased competition

from German discount retailer Lidl, as the credit crunch begins to bite. To counter this it has begunto price slash and run more promotional offers, all of which have been extensively marketed. Theapproach taken so far has centred on the purchasing power of the company and how this meanslower prices for the consumer. This is reflected in a recent rallying cry-style slogan which readsThe hyper purchasing power; Carrefour is working for you. Although not a direct reference to the

situation, it certainly hints at the problem and press ads also feature images of an army of the

chains workers, cheering as a result of falling prices. The campaign is very price-led with costsmentioned across all media forms. In France in particular, Carrefour has attempted to entice

customers into stores by slashing prices on a select number of electrical products (microwaves,bread makers etc) for set periods, which it has publicised by radio activity. It appears that such a

strategy is paying dividends as the group reported growth of 3.5 percent to euro10.8 billion ($13.8billion) at the end of October.

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United States

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Wal-martUS

Meanwhile in the US, retail monolith Wal-Mart is actually prospering during these times of financialwoe as changing consumer spending patterns seemingly favour brands offering the best value formoney. The brands Save Money Live Better initiative, introduced last year, is now coming into its

own following a series of ads advising families on how they can save up to $700 by shopping atWal-Mart, and how these savings can be spent elsewhere. Ads in this campaign have taken afunctional yet emotive approach with a focus on how such savings can benefit the family and

deliver special moments, the fulcrum of the strategy. Notable examples include back to school

and university starters activity which depict Mums describing how grocery savings have gone

towards textbooks, equipment and furniture. This is an approach which is set to continue with thecompanys Thanksgiving and Christmas marketing, ranging from TV to digital and circulars, to

concentrate on how grocery savings can be used to buy gifts - with gift sections in stores featuring$5 and $10 price points. An upcoming Christmas ad will, according to Steve Bratspies, senior VP-marketing, focus on how Mom's going to feel on Christmas morning when she can save money

and deliver the gifts that her children really want.

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TargetUS

Rival supermarket brand Target is trailing in Wal-Marts wake. Despite adapting its strapline toExpect More. Pay Less in light of the economic downturn, as well as vocalising its intent to be a

price leader, consumers still don't appear to be buying it. The retailer is having a tough timepersuading customers to snap up its more fashionable offering. Kathee Tesija, exec VP-

merchandising, noted that consumers are continuing to trade down, for example, from a duvet to acomforter. Target's house brands, however, are performing well, which she says is likely

attributable to a trade down from national brands. Right now the consumer is more than hesitant.

They are very stressed right now, and we, like other retailers, are all struggling from the inability ...to motivate and inspire people to come into our stores.

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Extending Discounts & Delivering Value PLACE


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Extending Discounts & Delivering Value

Good Til pricing

program, reducedpricing on over1,000 items throughJan. 7

Limited membership

to its Sams Club: $10for 10 weeks.

Cut Prices on

Over 300 Toysfor the holidayseason

Affordable food

summits whereconsumers aretaught how to lowertheir grocery bills

Offers classes

on how to cutenergy bills

Hired family financial

expert for onlinechats to teachshoppers how tosave money, paydebts or sell a house

Price cuts on

hundreds of itemsin anticipation oflower productioncosts

Offering ways

to feed a familyof four for $8 orless; similarprograms atHEB, Food

retailer strategies in economic downturn

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