The snapshot is that Lidl is spending twice as much as any other supermarket, excluding Asda, to put pressure on the big four. Ironically, Asda is the only supermarket that gets anywhere near Lidl's spend, but was actually overtaken by Sainsbury's, despite the latter seeing a very small drop in sales -- it turns out Asda saw a slightly larger drop.
Just outside the big four, the Co-Op and Waitrose saw encouraging growth. If you ask me, this is because of two things. People like the cooperative movement, which both subscribe to, and they each have strong loyalty schemes. Waitrose revamped its offering recently, and the early indications are that is performing very well. As such, both have outstripped the tiny growth and small losses experienced by the top four.
Where the big growth is being registered is -- as you might imagine -- Aldi and Lidl, which are up 16% and 11% for the previous quarter year-on-year. They may have changed their advertising message, particularly with Lidl's massive spend on its quality as well as price message, but shoppers are flocking to their doors for cheaper prices. They have no loyalty built up over the years and they have no brand positioning that people can ascribe to. In fact, it's so much about price that the two are generically referred to as "the discounters."
So we have good growth with the supermarkets that encourage loyalty and that are signed up to the cooperative movement's ethics, and we have substantial growth at the discounters.
I remember that when Lidl and Aldi began to gain traction, there was a lot of talk in marketing circles as to whether the big four should follow suit and compete on price or should seek to differentiate themselves in some other way. There has been some price-cutting among the big four, but from what I can see it can either be limited to a couple of key items or complicated on wider offers by loyalty points and multi-pack promotions. So if most people were honest, they would struggle to tell the difference between the big four -- but they know what the Co-Op and Waitrose stand for and that Aldi and Lidl are the "discounters."
Time then, it would appear, for the big four to each try to build a personality around their brand, an offering of some sort that sums up how it's different from the rest of the crowd? Morrison's has been clearly trying to do this with its television idents showing its trained staff professionally preparing produce in-store, but I can't honestly tell you what the other three are trying to do to build a better brand message. Asda has bought back the "pocket tap" which, to me, appears to be going head to head with the discounters on cost rather than trying to spread a quality or branding message. Tesco seems to be hammering home the breadth of its offering through promoting its F&F fashion line, while Sainsbury's wants us to get excited that it's summer. If only!
I'm no supermarket guru, but I suspect until the big four individually works out what they want to be, what sentiment they want to own, then the discounters will continue to grow and so too will the co-operatively owned supermarkets.
The squeezed middle, between quality and price, is not too bad a place to be right now -- the big four are still way ahead as the big four -- but until there's a brand image there that people can identify with, it's going to become increasingly squeezed at the cash register, if not the supermarket league table for the time being.