Eight of Britain’s food retailers have signed up to a new code of standards designed to protect consumers in stores. One of the biggest supermarkets has declined the opportunity to participate – but is it right to do so?

 

The Office of Fair Trading launched an investigation after being concerned by the artificial inflation of discounts in supermarkets. It used mystery shoppers, surveys, panel discussions and other tactics to delve into the culture of pricing. Over time, it noticed that some products were promoted as being bargains when the price had only been temporarily raised prior to the promotion, creating a false discount which could be seen to mislead buyers.

Morrisons, Sainsbury’s, Marks and Spencer, Tesco and Waitrose are among the retailers who have signed up to a new scheme OFT scheme designed to make pricing fairer. Asda, however, is notable by its absence from the list of participating retailers. Asda claims that its aim is to always present shoppers with the lowest price, and as such, the proposals don’t relate to the way it promotes its goods. It sounds unfair, but Asda could have a point. Rather than heavily promoting offers such as ‘buy one get one free’, Asda uses its Rollback scheme to drop prices of everyday items without the need to purchase large quantities. And although budget supermarket chains have agreed to the terms of the code, its contents are unlikely to affect them either.

In the interest of saving consumers money – and ensuring bargains were genuine – the OFT has come up with a new set of rules. First, higher prices will have to apply for an equal or longer period than the discounted price. This rule is designed to prohibit so-called ‘yo-yo pricing’ – bouncing the price of a product up for a short period and only offering it in a limited number of stores, then advertising a discount on a bigger scale over the longer term.

The other key rule regards ease of comparison where offers are advertised for bulk purchases. Anything advertised as being sold in bulk must also be available in a smaller pack in the same store so that shoppers can compare like-for-like. And where a product is advertised as being ‘best value’, the retailer must ensure that the product really is the cheapest of all identical items on the shelves. For example, a multipack of four cartons of orange juice advertised as the ‘best price’ would have to be cheaper than buying four single cartons of the same branded juice.

The new code has been welcomed by Which? who say it will help consumers evaluate the cost of food and household goods and make better choices. The consumer group had already analysed pricing and found that promotional prices were being advertised far more frequently than the ‘normal’ price, which it felt was misleading. Technically, a supermarket which was conning customers deliberately could be breaking the law.

Asda undoubtedly has its sights set on mobile and ‘click and collect’ – services which will make shopping more convenient. Even without the code of conduct, shoppers could still appreciate the benefits of using a smartphone to do their weekly shop.

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-Claire

Image from FreeDigitalPhotos

The rapid uptake of smartphones has had a significant impact in retail. Many stores are seeking ways to combat ‘show-rooming’, where consumers browse in-store and then buy elsewhere on their mobile. Some, such as Best Buy are simply matching online prices, others such as Macys and Toys-R-Us are creating a more immersive app-based experience to win their customers on the service side.

The other trend has been the re-invention of the store. Take the products away, and instead use posters to display the products. It means that the shops can be pretty much anywhere. Whilst some have described these as ‘virtual stores’, arguably they are not virtual as they clearly exist in the real world. Instead I am calling these ‘unstores’.

The first to appear was Tesco Homeplus in Korea, with their QR-based metro posters. Since then retail brands including PayPal (Singapore), eBay (London), Argos (London), Delhaize (Brussels) and John Lewis (Brighton) have delivered similar offerings. Net-A-Porter’s (London and New York) pop up window used augmented reality rather than QR codes, and Tesco’s F&F pop up store (London) used iPads and QR tags to allow users to order products.

These examples were all short-term, largely PR exercises, however the future looks more permanent. Chinese supermarket retailer, Yihaodain, plans to open 1000 unstores. It makes complete sense in that market. Chinese have no tradition of desk-top retailing, but the rapid uptake of smartphones creates an opportunity to engage the time-poor Chinese worker. This is likely to be just the start. I would expect many brands in Europe and the US to follow suit.

In terms of Tesco’s market share, 2012 hasn’t been the best year by a country mile. The company irritated buyers by slashing the value of its Clubcard scheme in September 2011, knocking thousands of pounds off the potential savings that could be made by its 15 million Clubcard members.

Around the same time – and for the first time in its history – Tesco started to lose traction.

The Big Price Drop campaign last Christmas was marketed as a way to save money on a normal shop. Customers didn’t agree. Tesco justified the change in tack by saying it wanted to provide more back-to-basics price reductions. Asda, its main rival, hit back with a guarantee that it would always be 10% cheaper.

Meanwhile, Philip Clarke, the company’s chief executive, gave the green light for a £1 billion scheme – which includes more than 150 different initiatives – to try turn fortunes around as shareholders began to fret. His initiatives included a complete rethink of the Tesco Value range. Relaunching the brand meant getting rid of the tired plain packaging, changing the name to Everday Value and marketing the products as a high quality, cheap alternative to branded produce.

It’s an approach that has served smaller rivals like Aldi well; the budget supermarket rival has built its entire marketing strategy on the back of providing this kind of economical alternative to high-cost food. In contrast to Tesco, Aldi have reported a massive 29.4 per cent increase in sales in a year, reportedly stealing up to a million customers from its rivals. Waitrose were also quick to take up the slack and pick up on the low-cost trend, dropping the price of more than 1,000 products to match Tesco – and providing an arguably more modern shopping experience in-store.

But bricks and mortar are also a sore point for Tesco. Ten years ago, Tesco’s rapid expansion began to irk its customers. The chain ended up holding a massive 30 per cent share of the market and won the ‘space race’ for planning permission and seemingly unstoppable expansion. Then customers realised they could just as easily shop online, and even the sheer quantity of Tesco stores did nothing to shore up its position. While Tesco’s UK reputation slipped, its overseas stores began dragging the company down further. Its chain of US grocery stores have yet to turn a profit in five years of business, and its strong presence in South Korea has been hampered by new laws designed to protect local retailers against multinational chains.

So can Tesco turn fortunes around this Christmas? They’ve already started whetting our appetites with new Fifa 13 mobile adverts that target customers within walking distance of a store. This is a good sign for the supermarket company: the fact it’s looking ahead to mobile marketing suggests that it’s prepared to modernise its approach. Another ad campaign strongly promotes home delivery, recognising the fact that the days of huge hypermarkets are perhaps behind us. Shifting focus to mobile and online is a promising step for the fallen giant, but the real test will come when the festive season rolls around again.

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Claire

Images from: Free Digital Photo Net

In the current times of austerity, everybody’s feeling the pinch and recently supermarkets have responded with branding overhauls of their basics and value ranges, making for an altogether more consumer friendly look.

Both Tesco and Morrisons have recently introduced block colour stylised illustrations to their respective ‘Everyday Value’ and ‘M Savers’ ranges (designed by Rocket, and Coley Porter Bell). These naive yet bold colour coded styles specific to each item, provide a much more aesthetically pleasing option than the previous trend of very plain and drab branding to represent the rock-bottom prices of such items. As well as providing a more appealing product to the consumer, I would say the rebrands have also brought the ranges bang up to date with current style trends.

At the higher end of the market, M&S has also launched a ‘Simply M&S’ value range (designed by Landor), taking cues from their main competitor Waitrose, which launched their ‘Waitrose Essentials’ range in 2008. Whilst the branding of these ranges still hints at a more luxury market, both demonstrate a simplistic approach with the use of white space and by displaying the product through clear packaging. M&S also uses a shopping list on each item as an indicator of the everyday use of such products.

What do you think of the trend in rebranding value ranges? Will it make cheaper items more accessible to a wider range of customers?

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