Recent figures released for the UK grocery market show that the value of the average basket is £5 lower than it was a year ago. Clearly, retailers still consider price the primary tool to win back business. Problem is, they all are using price as a weapon, and the German hard discounters know best how to play this game.
For all others, consider Revenue Growth Management.
Shoppers are very price aware, but not for all products, and not all the time. Revenue Growth Management helps to understand where there is room for offering more convenient packs, more choice, value-add promotions and - dare we say it - increase prices.
It all starts with understanding shopper trips and consumption occasions. A quick trip to the store at lunch time cannot be compared to replenishment shopping on Saturday morning. Still, supermarkets are mostly selling the same packs at the same price and with the exact same promotion to all shoppers - regardless of why they are visiting a store. There is a lot of money left on the table.
However, reality shows the industry is characterized by too many linear price cuts and automated price matching. And while price and price image are an element of choice for shoppers, product and service differentiation do not get the strategic focus they deserve. The result is a race to the bottom, with falling pound sales and falling revenues as a result.
The UK research mentioned earlier writes there was “extra cheer” for food shoppers heading into August as the price of the most popular branded ice creams decreased 4% in July. Not sure if ice cream suppliers' shareholders are joining in the cheer.