Matching Retail Value and Brands
20 Nov 2014|Erna George
South Africa’s retail environment is in flux, and retailers are having to be far more aggressive when it comes to fighting for their share of cash-strapped consumers’ wallets. This is particularly true of the grocery sector, where the cost of a basket of food items changes with every interest rate hike, or each upward movement in the price of petrol.
There’s increased competition in the form of new entrants (Massmart and OK have turned their sights on the grocery sector, given the slump in white- and brown-goods purchases) and in the form of more activity from existing players (Makro and Game are upping the ante for much the same reasons).
Even less obvious players are enhancing and marketing their FMCG offers (Kalahari.com [which is to merge with takealot.com, pending Competition Commission approval — ed-at-large]).
A step change or more of the same?
How are retailers engaging with consumers to deliver a great package deal (value, optimal shopping experience etc) so that — in exchange for patronage — consumers are assured of truly getting something better? Has there been a step change or is it just more of the same?
On the surface, retailers do appear to have enhanced the offering — there’s lifestyle experience such as the in-store sushi chef, and the convenience of being able to purchase theatre tickets at the cigarette counter. But much more than that, I cannot see.
What I do see is everyone playing the pricing game. However, it is not always a fair trade.
Price-promotion flash cards on packs do not always draw attention to the lowest-priced item. I understand that slots in the promotional calendar are booked and paid for months in advance, but I know consumers will often buy the pack with the big red flash and not stop to compare prices.
Losing faith and turning resentful
If they are taken advantage of in this way too often, two things will happen. First, consumers will lose faith in the retailer promise and, secondly, they’ll start to resent that — despite a promise of a low, low price — they still have to do comparisons, and that shopping begins to feel more and more like hard work.
It’s time for a breath of fresh air.
All retailers have loyalty programmes; most have a magazine. But, in reality, there’s not much difference between Woolworths’ ‘Dinner for 4 for R150’, Clicks’ ‘3 for 2’ specials and Checkers’ ‘Management of Inflation’. In today’s environment, retailers need a stronger experiential differentiator if they are going to be noticed.
Enter Pick n Pay’s Brand Match
Have you seen the ad?
It features a little toddler boy tired of spending all day driving from store to store to find the best deal. He’s ‘rescued’ by Pick n Pay Brand Match, which promises to check prices on 1 000 items at other retailers on a weekly basis, even when they’re on special. When you check out, it then compares the total cost of the price-checked products in your basket against those other supermarkets to see if they would have cost less. If the total cost of those price-checked products would have been less at the time of the price check, Pick n Pay refunds you the difference.
My knee-jerk reaction was YAY! Something innovative! Instead of my having to shop around, Pick n Pay has done it for me!
No leg work
It reminded me somewhat of Game’s promise from a few years back: ‘If you find it cheaper elsewhere we’ll match it and give you 10% (I think) discount’. Except I didn’t have to do the leg work and find it cheaper somewhere else!
Value genes a-buzzing, I set off for Pick n Pay. In-store, I was spurred on by the many blue and yellow Brand Match signs everywhere. But, slowly, my enthusiasm cooled — it seemed as if there weren’t too many of those 1 000 items on my shopping list.
At the till, I queried my discount, because I was certain I should have earned one. The cashier politely pointed to an amount of 86 cents printed on my slip, which would be discounted to me on my next shopping trip!
I had obviously not listened to the advert properly.
Further investigation revealed that the promise is a cash-back coupon for the difference to use on your next shop (keep your till slip) — to the maximum value of R50. There are also a host of terms and conditions to protect Pick n Pay.
For example, Brand Match is only applicable ‘when you buy 10 or more different bar-coded products and at least one is on the list of 1 000’. For example, the 1 000 products exclude categories or products including deli; bakery; cheese & meat & fish & fruit & vegetables (any product where price is determined by weight); Pick n Pay private labels (for example, PnP, PnP NoName, PnP Finest); all liquor except for wine and cigarettes (granted, Pick n Pay can’t be seen to contributing to social ills); clothing and accessories; general merchandise, including but not limited to pool chemicals, charcoal, stationery, magazines and newspapers and similar merchandise; and fuel.
If those aren’t in your basket, what is? Fish fingers, yoghurt and rusks?
Lured in and let down
My hopes for something new, bright and sparkly were dashed by the complexity and limitations. It felt like smoke and mirrors; I feel as if I’d been lured in and let down. Frankly, Game’s old offer is better!
Do not get me wrong: pricing is important, especially given the shape of our economy and consumer profile — but it must be a balanced value equation. When product-pricing parity exists across retailers — and let’s face it, it’s very close — more and more consumers in SA’s slowly growing middle class will choose a place to shop based on their connection with the brand and its total offer.
Many people I interact with openly admit that grocery shopping is becoming more and more demotivating, that when they see how little their money buys them, they resent handing over the cash or the credit card.
Yes, shopping for groceries is on the slippery slope to becoming a grudge purchase, like insurance. Retailers need to halt the growing sense that they have an unfair monopoly over life’s staples —they need to offer something that is at least more of an equal give-and-take.
- Can you champion the consumer’s cause, as well as your own, when it comes to pricing by creating a fair value mix?
- What are you offering in your proposition beyond price to take retail to the next level?
How can you innovate to move consumers beyond the grind of a sluggish economy and inspire them to spend with you again, happily?
by Erna George
Image credit: Gettyprev next