Archive for May, 2015

Driving the success of Discounters

Who can remember life before Discounters?

You will have been living in a vacuum if you haven’t read about the success of Discounters in recent years. Those who claimed they would never set foot inside such a store have started to become intrigued about what they have to offer…and they can’t help but be impressed.

When understanding how people shop is your day job, you can’t go to any store without over-analysing the experience, so why are Discounters doing so well…

We should always remember that shoppers are expecting retailers to optimise one or more of the following currencies for them when they shop; their time, their money and the experience they have. So how do Discounters maximise these?

1. Time

The time factor is definitely a key channel driver for most shoppers. Go to any of the large multiples and you struggle to spend less than 25 minutes in-store. However most shoppers can be in and out of Aldi or Lidl on a main shopping mission in less than 15 minutes!

So why is shopping in Discounters so quick and efficient?

Range/Choice – the range within Discounters is very focused, holding around 1500 – 2000 lines compared to the 30,000 plus that one of the Big 4 might carry. Far from limiting choice, this often encourages shoppers to buy more as they are exposed to categories they wouldn’t even consider buying in other retailers. This is a basic shopper principle; less = more. Shoppers often don’t feel short changed by reductions in range, in fact when range reductions have been researched shoppers often cite having MORE choice, not less, for the simple reason they can actually SEE what is there!

The limited range makes it EASY for shoppers – you can quickly go up and down the aisles rejecting categories at a glance if they are not on your list. Equally, there is no need to spend hours procrastinating over which blend of pasta sauce to buy; making choice easier. The downside is that they don’t always have everything you need, but the time saving outweighs the ability to choose every time for most shoppers.

Layout – the second element of the discount experience that saves time is the layout. Go into any Lidl or Aldi in the country, and it will look almost identical. Regardless of which store you go to from one town to the next, you know exactly where everything is, there’s no need to learn a new store layout as layout is consistent. This enables shoppers to draw upon their ‘learnt cognitive map’ and quickly locate products in store. Nothing annoys shoppers more than a store re-fit, as they have to re-learn this map all over again, spending their time navigating rather than buying (not an efficient driver of spend per second for retailers!)

Queue Time – Shoppers hate to queue! As shoppers we frequently agonise over which queue to choose and whether the person next to us is moving quicker than you. Not in Discounters! The staff are practically throwing the products at you, and it’s a learnt art to pack this quickly. This maybe a barrier to some shoppers, but for those that love shopping in Discounters its part of the appeal.

The entrance into online and convenience stores for Aldi also suggests that they are striving harder for more ways to win on the time/convenience currency.

2. Money

The clue is in the name for Discounters – and there is no doubt that overall basket spend is significantly less than other channels on the same mission. Their straight forward pricing strategy means that you don’t have to look out for deals and do the maths in-store (something we know shoppers don’t enjoy). This gives shoppers permission to buy more… splashing out on the “deluxe” range or buying an £8 bottle of wine, because they feel they are getting better value for money. So it’s not always about buying the cheapest, but offering value.

3. Experience

The experience is perhaps the currency that Discounters lack the most – and indeed where other channels can up their game. However, everything is relative, and given you are effectively shopping in a warehouse, there are a few `highs` that give you a sniff of that experience.

The `here today gone tomorrow` non-food offers that feature everything from gardening spades through to motorbike gloves are a little random, but are always packed with shoppers delving around for a bargain. A little light relief from the grocery shop, this adds a level of excitement! The Discounters execute this strategy well – with a good path to purchase shopper marketing campaign. The door drops highlight these `exclusive` deals, which encourage footfall and build the anticipation of what is coming next. The fact that they always sell out of the top sellers suggest this is a great tactic for the retailers.

Lidl and Aldi have well executed ATL campaigns – which really deliver the food/consumption experience shoppers are looking for – highlighting provenance, freshness and quality at affordable prices. However, this is not consistent through the line, as when you get to the store itself, it’s not always easy to find those ostrich burgers or prawn wan-tans that look so good on your big screen. We know that shoppers are in auto-pilot when they enter stores, forgetting what they have learnt elsewhere. Some simple POS or in-store displays featuring these items could help to raise better awareness towards them in-store – creating better consistency through the line.

So, the conversion to Discounters continues, although for most this is not the only channel used. Discounters deliver very well against two of the three key currencies for shoppers – time and money. Even though the experience is not as strong, the time and money savings compensate for this, and some small changes could enhance the experience further without compromising the other currencies. This also gives other channels the opportunity to work harder on the experience, where they can’t always match on price and time.

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