Under Scrutiny: Playing the quality game

Ed Garner, communications director at Kantar Worldpanel, believes that customers who based their purchases mostly on price only a few months ago are starting to indulge in quality food to compensate for budget restrictions on other commodities.

Speaking at a lecture on the 2012 outlook for the food and drink industry, organised by the Food, Drink and Agricultural group of the Chartered Institute of Marketing, he told Meat Trades Journal: “Only a certain number of consumers are heavily interested in price. People are starting to think that there is more to life than buying cheap food.”

Restaurant cutbacks


Moreover, people have cut down on restaurant expenses, creating opportunities for retailers to trade up their food offer. “Your value perception of what you put on the table for a family meal is quite different if it’s placed in 
competition against eating out or against cheap stuff at another supermarket. Marks & Spencer’s ‘Dine in for £10’ is a classic example of that,” added Garner.


However, the BRC believes that value will stay a priority for consumers in 2012. A spokesman told Meat Trades Journal: “Yes, inflation will go down, but other pressures, such as the price of fuel for example, will still exist, so we don’t see people’s health of personal finances changing quickly. When people opt for a nice dinner at home instead of the restaurant, they will be likely to indulge, but for their regular grocery shop, we still think that value will be key.”


In order to satisfy customers, supermarkets have been engaged in active price wars, but according to Garner, this has led to confusion and being the cheapest on the market does not impress any more. He believes it is becoming harder and harder for retailers to differentiate themselves on price, and that they should redefine their strategies. “Focusing on price and making it a race to the bottom is counter-productive, because if everybody does it, it strips value out of the market, and if only one retailer does it, it loses market share,” he said.


Tesco is the perfect example of the growing inefficiency of price reduction. The store’s ‘Big Price Drop’ promotion has led to a market share slip from 30.7% a year ago to 30.5%, despite a rise in the number of shoppers. However, its premium own-label Tesco Finest has shown encouraging performances, with a 13% increase in sales over the past 12 weeks. Sainsbury’s ‘Taste the Difference’ brand is also on the rise, up 8% over the same period. 


Garner strongly believes that own-labels will be the focus of retailers in 2012, and branding them efficiently will be what breaks the deal. He points to the example of cola sales in the 1990s, when both Tesco and Sainsbury’s launched their own label. At first, sales were very similar between the two stores, representing around 20% of all cola drink sales. But in 1994, Sainsbury’s rebranded its ‘Classic Cola’, changed its packaging and started advertising it, increasing sales dramatically to reach 65% of cola sales and distancing Tesco by a huge percentage. However, the advertising campaign was not maintained and over the years ‘Classic Cola’ sales fell back to their original level.

Own-label success

Own-label sales have been consistently higher than brands for months, and retailers are now even starting to promote own labels that do not carry their name. New York Soup is owned by Tesco, yet nothing relates it to the supermarket giant in the consumer’s mind, giving the product added value and allowing for higher pricing. The BRC spokesman added: “Premium own-labels are a good alternative for people who want to save money and switch down from more expensive brands.”


This tendency to choose quality products is also reflected in meat sales. Garner said: “While some people may have traded down to cheaper cuts, mince and basic chicken instead of other meat proteins, other people are happy to make an occasion of a set-piece roast, and for them price is less of an issue.” What matters to those customers is the advice and experience they get when buying meat. Morrisons has reproduced a market street, with a café, family butcher, fishmonger, greengrocer, bakery, delicatessen and cake shop in its stores, and the resulting success is undeniable. Morrisons’ year-on-year growth was 4.8% in the 12 weeks to 27 November – higher than Tesco, Asda and Sainsbury’s — with customers citing the butchery counter as one of the main reasons why they visit the store.


“Morrisons is still very price-driven, but it slightly overtrades on meat. It is trying to develop its butcher heritage with craft training and vertical integration. It is getting quite a lot of traction with this heritage of food. People go there because of the fresh meat and fish counters,” Garner explained. He believes other retailers could follow this example and offer advice and information on how to cook meat. Sainsbury’s has already started with its ‘Try something new today’ campaign and leaflets.

Garner added: “Let’s face it: a lot of people are inexperienced cooks and stores have a role to play in educating them. There are also a lot of misconceptions about meat, such as the idea that pork is fatty when it’s actually quite healthy. Meat counters are also more attractive than vacuum-packed cuts, and they can increase supermarkets’ business and help the meat trade in general.” According to Kantar Worldpanel data, the most common reason why customers go to Waitrose is, again, because of its fresh fish and meat counters.


But Eblex retail project manager Mike Whittemore warned that setting up a butchery counter did not necessarily mean offering a butcher’s service. He said: “There needs to be expertise behind the counter, and without trained staff, it cannot work.”


Of course, price is still an important factor, as evidenced by the dramatic drop in lamb demand following consistent price rises. With production also declining, supermarkets now have a crucial role to play in saving the British lamb industry. Garner believes a combination of promotions on price and advertising can encourage consumers to buy more lamb.

“There is a seasonality to lamb as it is traditionally associated with Easter. Last year, Sainsbury’s immediately leapt in and advertised a full leg of lamb for a very attractive set price. Approaches where both the advertising and the promotion 
come together can boost the sector,” he said.


To help the lamb industry further, retailers can also promote different added value cuts. Whittemore added: “Supermarkets are aware of the lamb price problem, and they are working to make lower-end cuts into more attractive ones. It maximises carcase value for producers and adds modernity for consumers.” 


As customers look for better quality while still watching what they spend, there is a also major opportunity for retailers to develop their frozen food offering. “When consumer confidence goes down, frozen food sales go up, as it is less likely to be wasted,” Garner commented.

Moreover, frozen is the biggest segment for online grocery retailing, a market expected to boom in the near future. But Whittemore points out that meat is not easily adaptable to the frozen sector, as the process tends to devalue meat products.


Supermarkets need to make dramatic changes to their marketing strategies in order to accommodate the latest consumer demands, but the overall outlook for 2012 is a positive one. “This spectrum of situations between people who buy for price and people who buy for food value will provide opportunities for all retailers,” Garner said.

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