An interesting time for supermarket advertising and marketing right now. Just at the very time that the big chains have admitted to being hurt by the no-frills, cut-price operators, Lidl changes tack.
Just at the time when Chief Executives were pointing out the price-based offerings were cutting in to their bottom line, as results were examined, Lidl chooses to change direction. It will surely
still maintain a competitive price edge in-store, but to the outside world it is repositioning itself as a place to indulge in life's luxuries -- namely sumptuous tables packed with wine, desserts,
chocolates and other treats.
No wonder the decision to change tack prompted a boardroom shakeup as two top executives found they had "unbridgeable" differences with the future direction.
The irony is only deepened by two huge announcements today in the supermarket sector which see the big players move right into the middle of a debate it would be fair to say Lidl was well
placed to punch above its weight.
Sainsbury's has won the right to take Tesco to the High Court over its Price Promise. The supermarket probably has a good point. Comparing prices on the
same branded product is a fair marketing ploy. Comparing and highlighting differences on their own produce is clearly open to debate because they are not the same items. One may have been sourced more
locally, have been produced more ethically and could well be of a higher or lower quality.
At the same time, Sir Philip Green announced today that BHS's planned move in to food
retailing will focus on undercutting rivals by 10%.
The elephant in the room here is that as Sainsbury's and Tesco are going the highest court in the land to duke it out over prices,
the country's best-known retailer, Sir Philip Green, is promising a deepening of the supermarket price war while Lidl appears to be backing away from the price message in its marketing.
Just at the time when it appears to be landing some heavy blows in the price wars, it changes tack. A cunning way of moving on from a launch based around price towards a more rounded long-term
strategy or a shot in the foot? Time will tell.
Lidl have never just been "cheap and cheerful" - they have always sold a small range of quality products. I think their real competitive advantages are lower store costs, high inventory turnover, and deals to sell top-end products from other European markets at marginal cost because the manufacturers have no presence in the UK. Like any smaller competitor, they are wise not to tackle the marketing from larger opposition head-on.