Low prices aren’t enough, the annual convention of the UK’s Institute of Grocery Distribution heard this week. British consumers want quality, flair and innovation. Asda wants the food industry to help provide all three. Chris Lyddon reports.“Since 2001 an increasing number of people say they are spending an hour or more on preparing and cooking a meal,” said Joanne Denney-Finch, chief executive of the IGD. “That reverses a very long trend.”
“The Slow Food movement is making an impact,” she said. “And people are taking back control of the ingredients in their diet.”
Research carried out for the IGD had looked at how stressed customers feel at various stages in the food preparation process.
“The checkout is the most aggravating point in the journey, worse even than unpacking at home or the dreaded washing up,” she said. “But when we asked how shopping could be improved… better availability beat even the checkouts into second place.”
Denney-Finch put the cost of ‘out of stocks,’ to the UK industry at £2.4bn (US$4.2bn), equivalent to two weeks consumer spending. “We’re getting better at availability but no-one has really cracked it yet,” she said.
For many people, the entire shopping process was physically and mentally “draining,” she said. “For some a major shopping trip is the most demanding exercise of the week.” One person surveyed as part of the research had suggested a shopping trolley with power steering.
“People in our focus groups were very good at inventing new gadgets,” she said “And the bigger survey gave most of these ideas the thumbs up.”
The list included an automatic trolley scanner, a gadget to find products in store and a home inventory management system. “People get very annoyed with themselves if they run out of something just after a big shopping trip,” she said. “Then there’s that feeling. I know I’ve felt it. When you buy a new product, open the cupboard and see another one staring back at you.”
So help with stock control was a popular idea. As was some method of adding up the shopping bill to avoid what she called, “checkout shock”.
More premium shoppers in UK
Denney-Finch also quoted research done by McKinsey on how people define value across Europe, segmenting people from the very price conscious to the very quality focussed. “According to McKinsey 31% of British shoppers are in the pure premium category, compared with just 4% in pure price,” she said. “Just look at how different we are to the Germans in this respect.”
In Germany the biggest group (27%) were in the ‘pure price,” category, with just 9% in the pure premium group. In France 9% were in the pure premium category, with 27%, the biggest group of French consumers, in the quick quality, group. 14% of French consumers were categorised as pure price.
“It strikes me that in the recent price focused market those Pure Premium customers have been underserved,” Denney-Finch said. “Consumers told us that the non-food section is the best part of a supermarket trip.”
“I leave you to judge whether that’s acceptable… but I don’t believe it’s inevitable, because innovative retailers are demonstrating how to make food shopping a pleasure,” she said. Bread Talk in Singapore had taken the bakery store to new heights in a country where bread is not traditional. “They’ve created an East West fusion, with lots of pizzazz and theatre that has the ex-pats, and the locals, queuing down the street,” she said.
She also quoted the Daily Monop stores, from Monoprix in Paris, designed for professional singles with a social area where people can cook and eat on their way home from work.
The most celebrated US example was Whole Foods, set to open a new store in Kensington in London. “I bet we’ll be tripping over each other to see this when it opens,” she said.
At a convention themed on “The Flair Factor,” Asda president Andy Bond accused the industry of being too slow moving.
“Nearly everyone is having a tough time – a really tough time,” he said “Sainsbury’s is trying to turn itself round; Morrison’s is – well I’m not even going to go there.” Asda was not immune. “We’re not where we used to be and we’re not where we want to be,” he said. “I’m not saying it’s bad – but it’s not good enough.” Even Tesco was complaining.
“Of course higher taxes, higher energy prices and all that economic stuff are partly to blame for consumers not spending as much as they did,” he said. “But I think it’s too easy to blame ‘external’ factors. Actually, we must shoulder the blame too – because we’re not delivering what customers want.”
Bland amorphous sameness
“They want flair – and they’re not getting it,” he said. “Instead, they’re getting bland, amorphous sameness.”
Bond, who came from Asda’s ‘George’ clothing brand, contrasted food retailing, adversely, with the clothing sector. “I guess one of the first things that struck me about the food retailing sector was how stuck in the mud it was,” he said. “The flair ain’t there. Nothing much has changed since M&S produced its first convenience meals back in 1973 – not really.”
He made his point by bringing two models, one male and one female, onto the stage. “They’re kitted out from head to toe in the latest gear from George – don’t they look fantastic,” he said. “And look, here’s a ready meal – Italian Tagliatelle. In all honesty, which would you rather take home?”
“The point is that what we are producing is simply not interesting enough,” he said. “It doesn’t titillate the customer and that translates into sluggish sales.”
“We’re just not innovating enough,” he said. “Think about how long it takes for us to put a new product on the shelves, between 24 and 26 weeks, and sometimes even longer.” He compared that with the clothing trade. “So how can the clothing trade do it in six weeks and it takes us half a year? Our whole process is stifled by inertia and bureaucracy, that’s why. It’s almost as if we don’t want to be inventive.”
He accepted that his own staff could be the ones making it hard to innovate. “I’m saying things have got to change,” he said. “Can you imagine what a huge difference it would make if it took us a few weeks to go from idea to shelf? It would be fantastic.”
“One of the things that worry me is that a lot of us are confusing innovation with incremental change,” he said. “People think they’re being innovative when they bring out a variation on an old theme…but really, it’s just more varieties of sameness, rather than truly new ideas.”
The industry was being far too cautious and conservative, or as Bond, dressed in casual clothes from Asda’s George range put it, “far too grey-suited.”
Customers did not really notice incremental change. “Most of them are too busy, too harassed and in too much of a hurry to care,” he said. “So it’s time to stop thinking about evolution and start thinking about revolution.”
He warned that if the supermarkets did not start being more innovative they’d end up all the same. “That doesn’t give the customer what he or she wants,” he said. “That just turns them off. No wonder so many people hate supermarket shopping these days. It’s boring.”
The other problem with convergence is that it meant that the biggest operator would always win. “Because, if there’s nothing to differentiate one store from another, the supermarket with the most sites wins out,” he said. “It’s self-perpetuating, it’s incredibly dull – It’s not what customers want and it’s not what you or I want, either.”
Bond wanted to work on relationships with suppliers. “We have a history of working hard at supplier relationships because we always thought that if we were good to our suppliers, they’d be good to us, and if they were good to us, the customer would benefit,” he said. “It’s quite logical but it doesn’t seem to be working lately. We’ve gone out of our way to be nice but we’re not getting much payback.”
Suppliers seemed to treat all the supermarkets the same. “It seems to me that suppliers simply don’t dare to establish points of difference between the supermarkets any more,” he said. “But I ask you – what is the point of Asda being good to its suppliers, if we get nothing in return?”
This isn’t meant to be a threat to all you suppliers in the audience – even if it sounds like one,” he said. “Actually, it’s meant to be an invitation.”
Food retailing had become lowest common denominator stuff. “It’s lost its bottle,” he said. “So I’m saying let’s work together and put the fun back into food. Let’s re-establish the points of difference between Tesco, Sainsbury, Morrison and Asda.”
The retailers could not do it on their own. “We need to work with our suppliers to make it happen,” he said. “We’ve got store managers who are desperate to make their stores exciting. We’ve got buyers who are dying to deliver more imaginative produce. And we’ve got the basic infrastructure to make it happen; strong logistics, strong IT and a commitment to everyday low pricing, so every supplier knows where they stand.”
“Traumatic” summer of 2004 for Sainsbury’s
One supermarket which has been suffering is Sainsbury’s which had a “traumatic” summer in 2004, according to its trading director Mike Coupe. “Our priority had to be to fix our underlying customer offer,” he said.
Availability had been the key issue and the company had managed a 75% reduction in out of stocks. Sainsbury had also made significant progress in improving pricing with 8,000 price cuts and had improved quality. “Our aim is to restore a direct customer appeal,” he said.
“Our customers tell us there is a place for a mass market supermarket which is not just about driving down prices,” he said. Sainsbury also wanted to change its customers a little. Most only bought from a range of 150 lines, despite the huge number on offer. “They’re sleep shopping,” he said. “We need to stimulate our customers to change a little.”
Steve Esom, managing director of the Waitrose supermarket chain, made the point that going for quality did not mean a licence to charge what you like. “We are a supermarket and we have to charge the same for milk as Tesco, Asda, Sainsbury,” he said in an interview session with convention compère, television presenter Michael Buerk.
He didn’t feel the premium ‘foodie’ market was being well served. “There’s a lack of innovation in core grocery,” he said. “The customer wants to go behind the product.” People wanted to know where and how foods were made. “To get quality back on the agenda is really important.”
Edwin Booth, chairman of North West England based supermarket chain Booths, made a similar point. “The Zeitgeist is moving towards those of us who place increasing value on the provenance of the things we sell,” he said.
Booth stressed the importance of his staff. He had an answer to those who asked how he was going to deal with increasing labour costs. “All the oily bits we’re going to automate,” he said, as he put up a picture of two members of Booths’ staff at a fish counter “I want to spend my money on these guys here.”
He stressed the origin of the food and said that 25% of Booths’ range was local. “Trading for us isn’t just about margins and numbers, it’s about the quality of what we sell” he said. “The quality of our relationship with farmers, packers and processors is paramount.”
Edwin Booth summed up Booths’ corporate attitude to food in one line. “We have to have food and we might as well enjoy it.”