- Contents
- *Analyst Comment
- Getting prices in perspective
- What people look for in a supermarket
- Figure 1: The most important attribute for a supermarket, August 2015
- Figure 2: Any factors in top five in choosing a supermarket, August 2015
- Do consumers really want promotions?
- Figure 3: Attitude towards EDLP, August 2015
- Disillusionment
- Figure 4: Attitude towards supermarket pricing, August 2015
- Pricing credibility and integrity
- Figure 5: Is it worth paying full price for Christmas gifts? January 2016
- Price uniformity
- Pricing integrity
Getting prices in perspective
It can sometimes seem that marketing by retailers has been reduced to just one factor – price. As if prices are the only thing that matters. It’s true that when it comes to choosing a supermarket, consumers rank price equal top with convenience, but perhaps that’s just a function of the relentless marketing emphasis.
What people look for in a supermarket
Yet it is not as simple as that and it never has been. The old saying that “retail is detail” is as true now as it ever was. Few people buy something simply because it is low priced; there are plenty of other factors that are also very important.
In Mintel’s Supermarkets – UK, November 2015 report, we asked what the most important factors were in choosing a store.
We gave people a list of 12 attributes and asked them to pick five and then rank them in order of importance. The top rank put price and convenience more or less equal top.
However, only a quarter chose price, and perhaps, just to look at the top rank is misleading. Looking at what factors people put into their top five gives a more nuanced impression:
This chart puts price in perspective. In fact it now ranks after convenience, while availability and quality are now very important as well.
Do consumers really want promotions?
There’s a contradiction here in people’s attitude to promotions. The above chart suggests that for half of grocery shoppers promotions are important. But that is not the impression when you ask directly about them.
For example, most of the grocery multiples are following Aldi and Lidl in adopting everyday low pricing (EDLP). Judging by the answer to the next question, this is absolutely the right thing to be doing. It is rare that one gets such unanimity in response to any consumer question.
This ties in with the results of the Competition and Markets Authority (CMA) Report, which was published a couple of months after this research was carried out.
Disillusionment
The results also support the idea that there is considerable consumer fatigue with the relentless emphasis on price.
Take the results of the next question. The result is not as unequivocal as the previous one, but still only 20% of the sample thought that there was any real difference in prices.
Pricing credibility and integrity
The most damning finding of all came from the research for Mintel’s Christmas Shopping Habits – UK, February 2016 report.
Price uniformity
It seems to us that one of the principal results of online development and especially of mobile, is that people are better informed. They can, and do check prices while they are out shopping. The net effect of that, plus the increasingly common price promises is that far from seeing an increase in price competition we are moving steadily to a state of price uniformity.
But we still have the situation where too many retailers adopt the practice of starting at a high price that they can then discount to make it look more attractive.
Pricing integrity
Consumers are becoming wise to that, and don’t always trust price discounts.
The shining exception to this is a small band of retailers, led by Next, which set the price at the beginning of the season and only discount to clear stock at the end of the season. Next understands that trust and pricing integrity are all important. Cutting prices during the season to solve a short term stock problem is a natural short-term expedient, but it comes at a longer-term cost.
Retailers need to price honestly and then their marketing can focus in on everything else that makes them great.