Author: Mintel Group Ltd.
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UK Retail Briefing - February 2016
Analyst Comment
 
EASYFOOD – AN OLD IDEA WITH AN OLDER TWIST
Great start
You can’t fault the marketing of easyFood – launched at a quiet time of year and with a flat price of 25p it attracted a huge amount of press coverage and “free” publicity. It was even covered by the national TV channels and beyond.

But what is it?
Essentially easyFood is a limited assortment discounter – a concept pioneered by Aldi back in the 1950s. But even by those early Aldi standards, this prototype has been pared back. Where Aldi settled down to 650 lines, easyFood has just 76 and there is no fresh or chilled merchandise (no milk or bread). The store is tiny – just 750 sq ft. These days an Aldi would be more like 10,000 sq ft.

But like Aldi, there is a huge emphasis on keeping the cost base as low as possible. 

FIGURE 1: easyFood – limited range, minimal store fit, February 2016
  
Source: Mintel

All own brands
All the lines are own brands from a cash & carry, mostly Happy Shopper from Booker. There are no branded goods.

If the format can be made to work, then easyFood will be able to develop links with suppliers to build own brand ranges of its own. That is what Aldi and Lidl did and it is the root of their success. But easyFood has to get the virtuous circle going first.

Fixed price
Charging 25p per item has been a great marketing ploy. It has generated a huge amount of publicity with the media keen to cover it. It also establishes the principle that easyFood should be a fixed price format. 

FIGURE 2: easyFood: Retail devastation at 25p, February 2016
  
Source: Mintel

It is not clear what that fixed price should be yet. Happy Shopper price marks many of its lines - 50p for pot noodles or a can of soup - and that must set an upper limit for the fixed price.

A commercial venture
Stelios Haji-Ioannou is said to have come up with the idea from seeing the number of people using food banks. He has a background of donating food to poorer communities in Greece and Cyprus. But we assume that this is not a charitable operation and that if it is to be rolled out it must be profitable. 

Out of tune
The format looks back to a bygone era. It is out-of-tune with the way that mass market food retailing is developing. Aldi and Lidl have prospered because they have responded to what most people now look for. They want good quality fresh foods, prepared meals, premium ranges and a more pleasant store environment. But in doing that they are increasingly serving the middle mass market and not the poorest members of society. 

Healthy eating
Judging by the questions being asked by the media, easyFood will come in for criticism for not providing "healthy food". There is nothing of the "we know what is good for you" condescension about this format. It aims to give people what they want to eat at acceptable quality and low prices. 

Where is it going?
The crowds queuing round the store on the opening day aren't a good indication. The word had got around that the product was really cheap and the store was rammed.

FIGURE 3: easyFood: Queues round the store on the opening day, February 2016
  
Source: Mintel

We reckon that most of the product was being sold well below cost so not only did the store attract people for the low cost food, but there seemed to be a number of local small traders who realised it was worth visiting as a cheaper alternative to the cash and carry.

The idea is interesting and it could just work. But it won't be anything more than a niche operation for the most deprived areas and it faces stiff competition from the start. Non-food discounters, such as Home Bargains or Poundland, are also popular for their food lines and Aldi and Lidl also do a great job.

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