Supermarket competition intensifies in UK

11 August 2009

LONDON: The competition between the major supermarket chains in the UK has continued to intensify in the economic downturn, with most of the main players now attempting to demonstrate they offer cheaper prices than their rivals.

One of the defining features of the current recession has been the rise of discount retailers such as Aldi and Lidl, who have greatly benefitted as consumers cut back their expenditure levels.

Tesco, the country's largest retailer, initially attempted to establish itself as "Britain's Biggest Discounter" in September last year, having launched 350 own brand, low-cost products.

However, the Advertising Standards Authority recently ruled that this tagline could be regarded as "ambiguous", and was "likely to mislead" consumers, meaning the company can no longer use it in its marketing materials.

According to Tesco, almost a third of all shopping baskets now contain at least one discount product, but while its like-for-like sales rose by 4.3% in the last quarter, this rate of expansion was lower than that of its counterparts.

Asda, which is owned by Wal-Mart, the world's biggest retailer by revenue, has employed an advertising strategy based on comparing its prices to those of the other big supermarkets, especially Tesco.

This approach was initially conceived in the wake of the fallout from the Northern Rock crisis, where the near-collapse of the building society caused rising anxiety among many British consumers.

Robert Senior, chief executive of Fallon, Asda's creative agency, said this "was an instinctive move at a time of confusion and congenital hysteria, when nobody knew what was going on. We had an answer – every day low prices."

Wal-Mart has since used similar creative executions in the US, and has now established a "retail-marketing academy" in the UK, where its executives stationed around the world will come to gain an insight into best practice in the field.

Rick Bendel, Wal-Mart's international chief marketing officer, argued "the UK grocery market is completely different from that in any other country in the world. These are world-class, marketing-led businesses."

Sainsbury's has also been focusing on value with its "Feed your family for a fiver" campaign, as well as modifying its in-store signage to more effectively direct shoppers to discounted items, and beefing up its range of own-label products.

In a similar vein, the company has adapted its "Taste the Difference" tagline to "Spot the Difference" in some of its TV ads, where it compares its prices with those of some of the other main grocery groups.

By contrast, Morrisons, which had a more established reputation for low prices prior to the downturn, has attempted to emphasise the quality of its fresh food, such as bread, fish and meat.

In Q1 this year, the Bradford-based firm saw an increase of 8.2% in its same-store sales, having continued with its long-running celebrity-led campaign (which is covered in more detail Data sourced from Wall Street Journal; additional content by WARC staff