Retail in the Week Ahead - Week 41
Kantar is holding a two-part webinar on European Discounters. This is the 18th year we’ve hosted this annual workshop designed for key account managers and their questions about how to improve results with Europe’s leading discounters.
We hosted Part 1 on Thursday 1 October – focused on Aldi and Lidl - with one of the largest audiences ever to attend such as session.
Part 2 is on Tuesday 6 October and there’s still time to register. This time we will concentrate on the fastest-growing retailers in bricks and mortar retail across the UK and European Union markets: bargain, also called value discounters.
Aldi’s campaign may have fallen foul of coronavirus concerns, but still sparked a new battle in Germany’s discount channel. (Source: Aldi Germany)
This week’s session will put the focus firmly on companies that are internationalizing or expanding into new territories within their home markets. Our agenda is in five parts with four presenters:
- Who are these guys? C’est moi
- Why do brands like this channel? Simon Johnstone, special guest from our Boston office
- What’s going on with shoppers during COVID? Josh Montague-Fuller, special guest from our UK Worldpanel team
- What is the Northern European model? Derya Güvenç, from our core UK Market Insights team
- Pack, price, promo, and placement. Hier bin ich wieder
Preis, preis, maybe?
The biggest question on everyone’s lips is, “What will discounters do with prices in the months when the economies of Europe fall into the deepest recession?” There are approximately three schools of thought around grappling with this issue.
- The Doomsday school. One group of key account managers believes that discounters will drop prices, attract the disadvantaged and win huge market share. This will drive value of the market.
- The Cautious Optimism school. These maintain that while the Doomsday group is partially correct, the harsh realities of COVID, particularly for older shoppers, will avert widescale disruption.
- The Digital school. This group believes that 2021 will be unlike anything we have seen in the past, with ecommerce surging and counterbalancing any momentum discounters might muster.
There is evidence to suggest each school might be right.
- Preis, preis, baby. On 1July 2020, when Germany relaxed rules on price changes during the pandemic and introduced a VAT-free period of shopping, Aldi Nord (North) combined with Aldi Süd (South) to run an aggressive price campaign. TV ads presented two groups in blue and red singing and dancing to a spin on the 1980’s Vanilla Ice hit Ice, Ice, Baby. Rather than Ice, the ad cleverly said “Preis (Price)”. The ads were pulled due to being deemed unsuitable during the pandemic, but a price war between Aldi and Lidl was soon in full effect regardless. This example boosts the arguments from proponents of the Doomsday school.
- Further evidence can be seen in country after country where ‘value’ retailers have failed to grow market share at the rates predicted by some analysts - even with the easing of lockdowns and restrictions on promotional activities. If you take a broader view of the value segment and include operators such as Mercadona in Spain, Biedronka in Poland, Penny in Germany and Central Europe, Denner in Switzerland, Colruyt in Belgium, Dia in Spain and Portugal, and beyond, you get a mixed series of numbers indicating that while discounters will perform well in pockets during the upcoming recession, they will not automatically succeed. This gives support to proponents of the Cautious Optimism school.
- Alternatively, many observers have seen retailers like Aldi (Nord/Süd), Lidl, and others rush into digital services and partnerships with home delivery specialists. These observers feel the time for ecommerce has arrived and that without initiatives like, for example, the Lidl Plus digital loyalty program, discounters will struggle to communicate with shoppers in the post-COVID period. These observers assert that lockdowns have taught shoppers new ways to pre-shop and to home-shop. Many consumers have enjoyed these new shopping methods and are never going back to their old habits. This is grist to the mill for the Digital School advocates.
So, let me conclude by asking two questions for the week ahead:
- Which school are you in?
- What are you doing on 6 October?
I hope you will send someone to hear more about Preis, preis, maybe, if you haven’t signed up already. You can also just chat with me on social channels if this topic interests you. I’m on email, LinkedIn and Twitter (@raygaul), so take a moment and chat.
Good luck in the week ahead.
Don’t forget to check out these other wonderful pieces of thought leadership from across our Market Insights team:
Retail IQ Publications from Week 40:
Post-lockdown grocery missions: what is here to stay?
The digital commerce quantum shift demands action now
What is Picnic and why the excitement?
Health & beauty can be online’s sweet spot
Mercadona: The five slides you need