Discounters begin to value POS more highly

Shopper buying habits and the grocery landscape are undoubtedly changing. But to date, much of the attention has been directed towards how traditional grocery retailers will fight back or, indeed, if they will be able to at all. As far back as 2008, in the midst of the recession, Tesco tried to its hand at being a discounter as it launched its £100 million, 350-strong range of low-cost products, under a ‘Discounter’ branded in-store campaign. Remember that?
But to focus on what the big four are doing is to miss perhaps the biggest change that is already starting to happen in the sector. Put simply, Aldi and Lidl are growing up. They are moving swiftly towards a tipping point – switching from being the new and disruptive challenger to becoming part of the established retail order. In short, the discounters are growing up as the market matures 
Their approach to the world of in-store is starting to become more sophisticated as a result. With that come challenges, and potentially a lot of pain, if they fail to get it right.

Never before have they had to focus on the fundamentals of delivering a great shopping experience, or had to look at how they can get more from what they already have in terms of improving performance at the point-of-purchase. As their store estate continues to grow – this month Aldi has announced plans to open 130 new stores – investment costs in infrastructure continue to rise and the rate of like-for-like sales growth starts to slow, they will have to.
Previously, both retailers had little in the way of POS present within their stores. Until now have paid little attention to mastering the complexities of communication at the point-of-purchase, other than pricing labels. Anyone who has visited an Aldi, Lidl or Netto store recently will have noticed that is slowly changing. Shoppers are now convinced that discounter retailers offer good value. But in order to steal real share from the big four, they must continue to demonstrate to customers that they can deliver quality.
Aldi has already trialled ‘premium stores’ Whilst these may not immediately translate to the UK, it appears that they are increasingly willing to discount their prices but not the value of the in-store experience, with the leading players continuing to invest more and more in their retail environments and tactical in-store tools such as point-of-sale material.

Lidl has invested heavily in above-the-line advertising to do just that, showcasing consumer ‘blind tasting’ as a means of promoting that the quality of their produce is as good, if not better than big brand rivals. In tandem with this, the next phase is investment in-store to reinforce those quality messages. Make no mistake: they are not striving to achieve the same level of in-store experience that you would find in a Sainsbury’s or a Waitrose store. But then there is no need to do so. Despite the push for quality, both customers and the retailers recognise that there is a trade-off to be made in in-store ‘comforts’, in return for greater savings at the till.

However, it’s essential to remember that being competitive is not just about slashing prices, and it should certainly not involve slashing standards. Clearly, both Aldi and Lidl already recognise this. The question is: are they best placed to do something about it?
As the big four retailers know, delivering success is all about asking questions like, ‘can displays maintain day sales whilst maintaining their visual presentation’, ‘is the customer journey cohesive’; ‘does the promotion make sense’; and can displays being implemented and maintained consistently across every store, in every city.

We have worked with major grocery retailers for a number of years – both Tesco and Asda . But recently, we also embarked on our first project for one of the leading discount retailers, too. They are beginning to pay more attention to POS installation  in-store compliance, and getting the basics right. That’s a good thing for standards in discount stores, and perhaps a further warning sign for the big four to start thinking about how they can up their own game.

Success doesn’t involve lots of capital expenditure. Instead, it’s about focusing on delivering better use of promotional space, ensuring store teams are fully engaged, and having a ruthless commitment to detail in order to land in-store activations successfully and reinforce the brand experience in stores.
As with any purchase decision in life, those that pursue a price-only focused strategy at the expense of everything else will end up will a few more pounds in their pocket, but ultimately, left feeling unrewarded. From a meal for tonight at your local supermarket, to choosing a retail installation specialist for your new in-store POS campaign, if you make a selection solely on price then, in the end, nobody wins. You will always find cheaper. And the people you buy from will have to sacrifice something, somewhere along the way to compensate for reduced margins. When it comes to the importance of getting your in-store brand delivery right, the message is clear – don’t discount it!