Top retailers should exploit food strengths
The big four had been hit hardest by the discounters, while premium food retailers such as Waitrose and Marks & Spencer had used their points of difference to grow their market share, according to Ed Garner, director with consumer insight specialist Kantar Worldpanel.
“They [Waitrose and M&S] are very clear about what they have to offer and they have both grown their market share as a result,” Garner told a Provision Trade Federation annual general meeting lunch in London yesterday (July 7).
Backing his argument, M&S revealed its food sales were up by 3.2% on last year, while Waitrose’s sales were up 4.6% to £6.5bn. Yet, the big four had all reported diminishing sales and profits in the past 12 months.
Garner’s claim followed Waitrose boss Mark Price’s call for supermarkets to stop price cutting or face being “wiped out” earlier this week.
Pack a more powerful punch
The big four’s strengths
- Tesco: it’s huge size means it can buy more for less
- Asda: known as the UK’s best value retailer before the discounters arrived
- Sainsbury: strong Fairtrade and organic offers
- Morrisons: should exploit manufacturing
Source: analysts
However, retailers such as Morrisons and Sainsbury had the potential to utilise their points of difference to pack a more powerful punch in their fight against the discounters, Garner added.
Sainsbury stocked more Fairtrade Food and organic food than the other big four and could leverage that to attract more customers who felt guilty about the environment and fair trade, he said.
“It’s a point of difference for Sainsbury,” Garner explained. “You can leave a Sainsbury store with a lot less guilt than you can others, which is their argument and it’s not much more expensive to do that.”
Sainsbury sold only Fairtrade bananas and cage-free eggs, which was something the rest of the big four did not do, he claimed.
“[Sainsbury] should think more about what it can do with ethical and organic now because the world [of retail] is evolving and the discounters are moving more into that area.”
Play more on its ethical credentials
The chain should also play more on its animal welfare credentials to entice consumers by letting them know how good they would feel after buying its products, Garner added.
Meanwhile, Morrisons’ food manufacturing and Market Street offering made it appear more trustworthy than others, Garner has said in the past.
Shore Capital director and head of research Clive Black had urged the retailer to “weaponise” its manufacturing facilities in the fight back against the discounters.
More vertical integration in supermarkets would allow them to maintain better profit margins and react quickly to market changes, another commentator added.
However, head of the food team at Rollits solicitors Julian Wild, said Morrisons should sell its manufacturing facilities and focus on being a retailer.
