UK: Price "losing its competitive advantage" in UK grocery - Sainsbury's
Price is no longer a competitive advantage in the UK grocery sector, according to Sainsbury's commercial director Mike Coupe.
With consumer confidence in the UK low, food retailers are emphasising the value they believe they can offer shoppers. Last week, Sainsbury's rolled out its Brand Match price-comparision scheme across the country.
Coupe said the prices retailers charge were becoming increasingly transparent and he believed that "price as a differentiator will be an increasingly difficult position to sustain".
"So the premise of our brand positioning is you don't have to worry about prices because we will brand match at the till and you get the Sainsbury's quality underpinned by a set of values," he told just-food on the sidelines of the IGD Convention in London.
Asked how that position fitted with the raft of price initiatives in the industry over the last month, Coupe said: "All our businesses have to be underpinned by strong values, particularly price propositions, of that there is no doubt. But it's the transparency of price that makes it very difficult to gain a competitive advantage. That doesn't stop us trying to do it which you can see in the last couple of weeks; everybody is making a stand on price. But if you actually look at it, it does very little to move customers around. The values that underpin the business, in my view, will become the differentiators."
Other dimensions in the marketing mix such as service, quality of products and own-label will become important, Coupe said.
He pointed to Sainsbury's decision to revamp its own-label range and its "20 by 20" sustainability plan, which sets out 20 targets for the supermarket giant to achieve by 2020, such as doubling the amount of British food it sells, reducing carbon emissions by 65% compared to 2005 levels and creating 50,000 jobs in the UK.
"Each one (initiative) might be small but the cumulative effect of lots of these things does change behaviour over the medium to long term," Coupe said.
Asked if the competition on branded prices and the focus on own-label were increasing pressure on food manufactures, Coupe said: "We believe our relationship with our suppliers is very strong. If you look at quoted companies in the UK certainly large branded manufactures have had a pretty good run. So I suspect you would have difficulty illustrating that the branded supplier community is under any form of pressure. You could argue quite the opposite."
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