Market share gains of hard discounters Lidl and Aldi

November 28, 2017

The recent decision by Aldi to reduce waste and give the shopper 50% off expiring food is certain to increase footfall to the store.  The question is will your brand benefit from the increased footfall or will it be pushed to promote as deeply as ever?

 

Retail switching can generally be seen as negative when evaluating promotions.  You should have sold at full price in one store, but because of your promotion you have sold more cheaply in another.  However if switching behaviour is driven by external factors there is the potential to increase volume sold without the cost of promoting.  Aldi’s latest development may indeed increase volume sold, but is this discounter already demolishing value with its low prices and intensive promotional programs?

 

By arming customer managers with the right information to tailor campaigns you can push back against deep discounts and show your customer how value and profitability can expand the category.

 

Using increased footfall to your advantage:

  • Cash strapped shoppers look for deals: promotions that increase consumption should be offered so as not to simply give away your margin

  • Negotiate meal deals: Shoppers looking for 50% off expiring food may respond well to a further discount when bought with your product.  Get your salad half price and your salad dressing less 25%

  • Structure your promotion programs per customer:  the Aldi shopper may purchase expiring foods, revealing a type of shopper who wants and needs deep discounts, other retailers may attract a different shopper where very deep discounts will demolish your brands integrity.  Promotional pricing elasticity can identify differentiated approaches.

  • Beat the competition: you may not need to beat them on price, but on perceived value.  Make promotions work with higher RSPs to give the shopper a good deal

 

Don’t let the complexities of promotion and pricing elasticity stop you from optimising promotions.   Accuris is leading consultancy with the dedicated team and knowledge to transform your promotional analytics, strategy and vision.

 

 

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