Blog: Retailers should not discount premium push
Dean Best | 30 July 2008
For all the talk of Aldi and Lidl's recent success in the UK and discount retailers in Europe faring well amid the credit crunch, consumers are still willing to buy premium – should brands get their positioning right.
News that Colruyt, the Belgian discount chain, is benefiting from local consumer concern over the economy and is seeing its cut-price strategy pay dividends, may only add fuel to the argument that food retailers must lower prices to stay competitive in these times of economic uncertainty.
Here in the UK, you can't watch the TV without seeing ads for Morrisons' “price crunch” or Asda's claims that thousands of its products are cheaper than at Tesco. A price war is well and truly on.
However, amid the doom and gloom on the business pages about tough times on the High Street, there are stories (Domino's is one; Thorntons is another) that show some food companies are having success as consumers tighten their belts.
For, amid the penny-pinching, consumers still want to buy quality and, while they may be cutting back on eating out, they are looking to eat better when eating in.
Retailers should beware of wide-ranging price cuts. Fear of losing share to the discounters is one thing but just as strategically important is continued investment in premium, upmarket ranges designed to catch the consumer now reluctant to eat out.
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