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Rethinking value

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Liz, our Managing Director, was recently asked to write an article for A1 Retail.

Value retail in UK supermarkets is changing.

Driven in part by shifting notions of low cost ranges elsewhere in retail and in part by fierce competition from the German discounters, this is not only reshaping the supermarket experience for UK shoppers but is also forcing all retailers to rethink the role value plays in the overall offer.

For decades now supermarkets have responded to recessions by launching value ranges. For a long time it was a successful strategy, but more recently these ranges have struggled. According to Kantar Worldpanel, at the two biggest retailers in the grocery market, growth in the sales of branded goods has outstripped own-label for a while and this has been particularly marked at the value end.

There has always been a low level of trust around quality. Elsewhere we have become accustomed to – even enjoy – shopping at lower cost retailers. Look at the homes full of affordable flatpack Scandinavian furniture and clothes bought to be worn one season and recycled the next.

Then the German discounters arrived offering us good quality low cost food, and UK shoppers embraced them enthusiastically. Shopping there carries no stigma – we’re now used to doing it, are confident we can get good quality products at that price point, and openly boast about how much we’ve saved on our food shop – but it still exists around value ranges elsewhere.

All of this means that the days when the bland white and blue packaging would be hurriedly pushed to the bottom of the shopping trolley are numbered. Last summer saw the launch of a supermarket chain replacing its long-established value offer with a number of standalone brands which not only reassured on value and quality, but were designed to make customers smile.

It’s a watershed moment – the point where all supermarkets need to rethink their value ranges. This begins with understanding the role their value proposition plays in their customers’ lives, and then work out their motivations to buy value in each category – it’s not always to save money. Use category codes to reassure shoppers – give them the bright jewel colours in confectionery, minimalist design cues in beauty and personal care, and warm hues in biscuits.

Ultimately, it’s not just about price. More than anything this is about finding ways to connect emotionally with shoppers. Whether it is premium or value, the successful supermarkets of tomorrow will reassure consumers on quality, and forge the sort of emotional connections that make people enjoy the experience and keep them coming back for more.

To read the full article published on A1 Retail, click here.

Elizabeth Finn - Managing Director - Cowan London
4th February 2019