Aldi and Lidl’s value proposition has dominated the discussion in grocery retail in recent years, as well as dictating the strategies made by other major players in the sector.
The German duo are on course to increase their outlets and customers next year, despite their rate of growth slowing.
But ex-Sainsbury’s CEO Justin King has tipped UK supermarket prices to rise by at least 5% over the next six months, meaning that there will very likely emerge a gap in the value market with which wholesalers can help their customers.
“We all know that value is critical for customers looking to get the most for their money. However, value often focuses on the essentials and for 2017, it will become increasingly important that value products reflect retail trends. It is also essential that value represents not just price, but also quality.”
John Searle, trading director at Landmark Wholesale, strikes a note of caution, though. He says: “At Landmark, we know that shoppers do not shop on price alone, but clearly value remains a key driver. Wholesalers should ensure that they continue to provide a tiered ‘good, better, best’ offering of brand and own-brand to their customers to cater for every price point.
Neil Heseltine, brand ambassador for Liverpool-based wholesaler Brand Choice, speaks of the need for wholesalers to look at their ranging and pricing.
He adds: “Value lines are important, so that the retailer can hopefully offer ‘wow’ lines in the shop. I think the independent retailers that are doing the best job are the ones that offer convenience and discount in the same retail space. If the shopper sees value lines on aisle-ends or mixed throughout the store, they are more likely to pick up on impulse.”
The right offer
Heseltine says Brand Choice’s strategy on value lines next year is to “carry on looking for value lines, but to make sure that the lines we are sourcing offer proper value and not just a bit of extra fill”. He says: “We try to work with smaller local producers to offer better quality at better price points, but we also say no to pointless promotions.”
He adds: “We try to look for areas that others are not covering. At the moment, we are looking at the pet food market and ways we can bring our pet food lines into the convenience and discount market – for example, better ways to merchandise, and the right ranging at the right time of year.”
Price-marking is an important way to communicate value to shoppers and Landmark has plans to continue using this tool to help its members and their customers.
Searle says: “The £1 price-mark continues to offer a clear, simple, value price message. As a result, we have launched a number of £1 price-marked products, including Lifestyle Value Noodles, Lifestyle Value Family Biscuits, Lifestyle Value Water 5l, Lifestyle Value Batteries, and Lifestyle Value Jams.”
The buying group also regularly offers own-brand promotions to ensure that it gets the most out of its value proposition. Searle adds: “We remain focused on launching new value items to ensure that the range is kept relevant and meets customer demand. To ensure our members’ customers are aware of our range, we have clearly identifiable ‘Value Zones’ in all depots.
“The Landmark own-brand range is continually reviewed and is based on robust sales data, to ensure that we provide the very best products with the very best value for our members for resale.”
To get the most out of the value trend in 2017, the onus is on wholesalers to ensure that customers are presented with the right offer and have the tools to make the most of it.
Heseltine concludes: “I think that this time next year, c-stores will definitely be carrying more value lines. If they are not, then we are not doing our job properly.”