If it has taken 60 years for supermarkets to build trust in best prices since the fifties, and has now been – as Andy Higginson says – ‘wiped out in an instant’, the issues for retailers have to be:
- How long to rebuild that trust?
- What degree of price-cutting will be necessary to make a difference?
Rebuilding trust?
Given that pricing confusion – difficulties in making like-with-like comparisons - is but one element of the consumer-retailer-supplier contract, those retailers that are really serious about rebuilding their credibility with shoppers will need to re-assess the entire ‘package’ in order to ensure that any gains via deep-cut prices are not diluted by disappointment on opening the tin…
In other words, household brands and even private label products that have been disguising price increases by reducing contents have to be regarded as parties to the ‘deception’ in that whilst they comply with the ‘letter’ of contents legislation, they are often in breach of the ‘spirit’ of consumer expectation…
Also, when it comes to actual ingredients, it hopefully goes without saying that any ‘short-changing’ of the shopper-consumer via inferior substitutes will add to a savvy consumer’s view that brand owners or retailers cannot be automatically relied upon as outsourcing-partners in making the decision to buy.
All of these areas have to be corrected to get to square one in rebuilding trust in major multiples…
Making a difference via price-cuts
Given the above entry-level changes on-shelf, the question is how big a price cut will make a difference?
Essentially, given the easy-availability of price-comparison facilities, on-shelf prices will have to at least match the discounters on an ongoing basis, with any (minimal) price premium being justified by advantages in the shopping experience. Any over-estimation arising from retailer-ego will soon be challenged via consumer walkaways...
How long?
Given that it took 60 years to build the trust…
Seriously, any retailer that succeeds in correcting the above trust-issues, has to experience growth at the expense not only of the discounters, but will also eat into the shares of other multiples...
It simply depends on how radical they want to be…
- How long to rebuild that trust?
- What degree of price-cutting will be necessary to make a difference?
Rebuilding trust?
Given that pricing confusion – difficulties in making like-with-like comparisons - is but one element of the consumer-retailer-supplier contract, those retailers that are really serious about rebuilding their credibility with shoppers will need to re-assess the entire ‘package’ in order to ensure that any gains via deep-cut prices are not diluted by disappointment on opening the tin…
In other words, household brands and even private label products that have been disguising price increases by reducing contents have to be regarded as parties to the ‘deception’ in that whilst they comply with the ‘letter’ of contents legislation, they are often in breach of the ‘spirit’ of consumer expectation…
Also, when it comes to actual ingredients, it hopefully goes without saying that any ‘short-changing’ of the shopper-consumer via inferior substitutes will add to a savvy consumer’s view that brand owners or retailers cannot be automatically relied upon as outsourcing-partners in making the decision to buy.
All of these areas have to be corrected to get to square one in rebuilding trust in major multiples…
Making a difference via price-cuts
Given the above entry-level changes on-shelf, the question is how big a price cut will make a difference?
Essentially, given the easy-availability of price-comparison facilities, on-shelf prices will have to at least match the discounters on an ongoing basis, with any (minimal) price premium being justified by advantages in the shopping experience. Any over-estimation arising from retailer-ego will soon be challenged via consumer walkaways...
How long?
Given that it took 60 years to build the trust…
Seriously, any retailer that succeeds in correcting the above trust-issues, has to experience growth at the expense not only of the discounters, but will also eat into the shares of other multiples...
It simply depends on how radical they want to be…
