UK shoppers have specific preferences
when it comes to their favourite supermarkets. M&S was voted as the best in
a recent survey, followed closely by German discounter Aldi (Waitrose, Tesco
and Sainsbury’s were next). Aldi’s position is evidence of how discount
retailers are reshaping consumer perceptions and the sector as a whole.
Consumers probably expect a budget
supermarket to copy from more upmarket counterparts to signal quality to
shoppers. We just need to look to the case of Aldi’s copycat caterpillar
Cuthbert – a cheaper version of M&S’s Colin, to see that.
But now we’re seeing a reversal of
this trend. Tesco’s Clubcard design was recently found by the High Court to be
copying the Lidl logo. So why would a giant like Tesco copy this big yellow
label? UK consumers perceive Lidl as a lower-end supermarket. Tesco is not.
The success of the Clubcard logo lies
in the brand image that consumers associate with Tesco. The store makes use of
the perception that it’s not cheap, unlike Lidl. Tesco allows Clubcard owners
to access branded products at discounted prices, through Clubcard membership.
It still maintains its brand image as one of the ‘big four’ supermarkets, as
well as a retailer that provides benefits with a membership.
Tesco is not the only retailer to
adopt this approach. Sainsbury’s is shifting from allowing consumers to collect
loyalty points on a Nectar card to focusing on Nectar Prices, where they also
provide discounts via membership. This approach enables Tesco and Sainsbury’s
to communicate a clear message to their consumers: stay loyal to us and we’ll
treat you differently with lower prices for the premium products.
In addition to membership benefits,
these retailers also emphasise their new lower pricing strategies – with
explicit reference to discount rival Aldi – on certain products. Tesco asks
consumers to look out for the red Aldi Price Match bubble, and Sainsbury’s
adopts a similar approach for products, again explicitly communicated as an
Aldi Price Match.
Unsurprisingly, other retailers like
Morrisons and Asda recently introduced similar schemes, leading this pricing
approach almost to be a sector norm. In acknowledging that their offer faces
stiff competition from discounters, they’re trying to keep up with Aldi and
Lidl. And with consumers now expecting price matches, the supermarkets are also
attempting to keep pace with each other.
So why are we seeing this shift
towards loyalty cards and explicit comparisons to lower-end rivals? One answer
could be because loyalty cards are a good way to collect consumer data.
However, the best answer would be that the supermarkets are adapting to meet
the changing demands of consumers in an increasingly price-conscious market.
Consumer behaviour is developing a
more frugal focus due to the effect of inflation and pressure of the UK’s
rising cost of living on consumers. Food price inflation had been especially
high, rising sharply in the last few years, with a record peak of 19.2% in
March 2023, now around 4% from March 2024.
In the ten years after the 2008-2009 financial
crisis, average earnings stayed relatively low, and disposable income hasn’t
seen much growth either. These factors have affected confidence in the retail
sector. Although there has been a slight growth since late 2022, consumer
confidence remains well below pre-pandemic levels.
Colour coding
These economic pressures are driving
supermarkets to rethink their pricing strategies and product offerings, leading
to the ‘copying down’ approaches. On average, consumers take only 13 seconds to
make a purchase decision in-store, and some studies show this to be as little
as five seconds. That’s why these messaging strategies like colour and name-checking
rivals are so important.
Most often the first thing consumers
see when entering a supermarket is the fruits and vegetables. There is a very
simple reason for seeing the ‘greens’ first – consumers associate the colour
with freshness and health, and it has a calming effect on the brain, reducing
stress and anxiety.
Consumer research shows us that
colours have a clear effect on our feelings and purchasing behaviour. Yellow
has been associated with happiness, and in general warm colours make us think
the temperature is warmer than it actually is. Yellow and red also appeal to
impulse buyers.
So when we see a yellow sticker in
Tesco, we get a special deal, and this leads to a temporary feeling of pleasure
or excitement – that sudden rush of dopamine often referred as ‘shopper’s high’.
And Lidl was already there with the big yellow circle branding that was to become
so contested. It’s not a coincidence that other grocery retailers have long
been using yellow stickers for cut-price items as well. Tesco’s red price-match
bubble signifies urgency and excitement.
As food prices continue to rise across
almost all product types, the cost of the weekly shop is becoming an issue for
more UK households. It’s probably not surprising therefore that supermarkets
now see their most potent weapon as price rather than the perception of luxury.
Melisa Mete, Lecturer in Marketing
Henley Business School, University of Reading
This article is republished from The Conversation under a Creative Commons license
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