As edlp strategies continue to pay off for Tesco and Asda, Sainsbury’s outgoing chief executive Sir Peter Davis said the supermarket would pursue a more aggressive policy, which will include extensive price cuts throughout its stores. His statement came as Sainsbury’s announced Mark’s & Spencer’s Justin King, a strong advocate of price competition, would take over as chief executive in March.
Meanwhile, when Morrisons’ purchase of Safeway is finalised it will create the third largest multiple retail group in the country, driven by the former’s low-price approach.
Recent IGD research showed consumers are largely uninterested in who acquires Safeway, but that many expect lower prices to arise from the deal, in addition to ongoing high standards and the retention of Safeway initiatives such as Shop and Go. They also expect these changes to be effective as soon as the management switch is complete.
This swing towards edlp further separates the country’s largest grocery multiples from ‘upmarket’ retailers, such as Waitrose and Marks & Spencer. Christian Cull, head of press and PR at Waitrose, said the store remained committed to its policy of “quality food honestly priced”, which, he commented, “represents the true definition of value.”
“Good food costs what it costs for a reason,” he said. “Everyday shopping items are priced competitively at Waitrose … But Waitrose succeeds in its pricing and positioning because of its consistency of range and message. You know what you get — and you get true value. People want to know where their food comes from and who it comes from too.”
According to a further study by the IGD, Shopper Insight Loyalty and Pricing, 60% of consumers preferred an edlp-based strategy to one built entirely on promotions. Over half of them said they would choose edlp because they shopped on a budget, whereas the rest either commented that promotions were not relevant to them or that they perceived promotion-led supermarkets as having higher prices on other items.
However, both studies revealed many shoppers felt having no promotions at all took some of the excitement from the purchasing experience. Some 23% said they favoured stores that ran special offers because this enabled them to stock up and save money in the long run. BOGOF offers were most preferred in larger households and among shoppers who were not working. Surprisingly, only 8% of shoppers wanted promotions so they could try new products. A total of 31% said offers and promotions were a major factor in enticing them into stores other than their main food outlet.
