Big grocers and discounters all playing with complexity

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Grocers need to unravel complexity

These are transformational times for the grocery industry and the travails and challenges of the big supermarkets were laid bare at the recent IGD Convention in London.

It has been the case that the big multiples have over the years continued to add complexity to their businesses as they have brought in extra services, added new channels, introduced new non-food categories, and ventured overseas into new territories.

The result for many years had been growing revenues but now there is a backlash from consumers towards this irritating complexity and the key solution to their problems, as highlighted by Joanne Denney-Finch, CEO of IGD, is greater simplicity.

This involves less promotional activity, simpler ranges and easier in-store navigation. If a major grocer delivered on all these aspects then they’d look very much like a discounter.

It is therefore rather ironic that as the discounters eye up ever greater market share growth they recognise the need to boost basket sizes by increasing the ranges, adding in bakeries and bringing in greater amounts of fresh produce. And also make the environment in-store a little more inviting.

Do you know what this ultimately brings – you guessed it, good old complexity.

What Denney-Finch also highlights as part of the solution for the big grocers is adding more of a sense of fun into their stores. It is absolutely the case that they need to entertain their customers more. Hence the sensible moves by Tesco to add in Giraffe and Harris + Hoole outlets into its larger stores and Morrisons’ is overhauling its cafes to bring them into the present century.

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New Morrison’s cafe

The difficulty here is that the major grocers’ major objective over numerous years has been to make the store experience as sterile as possible in order to convince us that we detest food shopping. This has then enabled them to legitimately get us out of their stores as quickly as possible.

In the process they have undoubtedly also convinced themselves to dislike food shopping and not regard it as a sensory and enjoyable thing to do with your time. Unfortunately for the grocers, consumers increasingly enjoy food shopping. A recent survey from Quidco found just 37% of people found shopping for food a chore.

The upshot of this is that adding fun and theatre requires a radical shift in the major supermarkets’ mindsets. Whether they are ready for this and whether shoppers can really believe this radical change is authentic and dare I say heartfelt remains a big question.

The reality is that the multiples have to make some great cultural changes if they are to get back on the track to growth. But at least they appear to have one thing in their favour: their nemesis the discounters seem hell bent on following them down the dead end to greater complexity.

 

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