Straight talking – cheap at half the price!

Posted on December 4th, 2013

As a sporty person, eating well and eating healthily is really important to me. Unfortunately I have a limited budget which means I have to be really careful as I do my weekly shop. Having walked around the aisles of the major UK supermarket chains, they all have one thing in common: they all constantly advertise discounts, complex deals, and continually change their prices. I can’t keep up.

Clearly this approach has worked for many of our largest and most profitable supermarkets for some time. However I do feel more and more customers – like me – are starting to get suspicious when they see “buy 2 and get 3” or “any 2 for £6” in front of them. Public cynicism over the questionable value of these offers is now being reflected in the mainstream media.  As brilliantly pointed by my colleague Julie Hindmarch, the recent success of German retailer Aldi is not all about cheap prices, and in my view their approach to transparent product pricing is key to this. This approach can really work.

23085981_sThere’s a great example of this successful alternative commercial model back in Spain, that of Mercadona. What started as local grocer has now turned into the undisputed market leader, with sales even higher than the powerful Inditex Group, owner of a range of well-known brands including Zara.

In a market dominated by French retail giants offering a myriad of arcane deals, Mercadona made price transparency and stability one of their key USPs. You will find no more than 2 or 3 discounted items at Mercadona stores. However you will be able to know the price of a dozen free range eggs without being a rocket scientist. What’s more, you will notice every single price increase – these do happen of course – because there’s no intention to hide it. Contrary to the rest of the competition, loyalty cards have no place within their stores, nor do they form part of their strategy.

In the words of Harvard Business School professor Zeynep Ton, “Mercadona does more for their customers by doing less“. It’s been a highly successful approach in Spain, but it will be interesting to see if it’s as successful in other markets. I notice they have announced plans expand to Portugal and Italy during 2014.

Returning to Britain, I´m hoping the trend started by Aldi and the like extends to the other supermarkets. There’s a legion of loyal customers who don’t want complex fancy deals, we just want honest, transparent value. When we get it I’ll be found at the front of the queue.

Rod

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