7 Strategies: How to combat the discounters

7 Strategies: How To Combat The Discounters


Release date: March 10th, 2015 (99 pages)
PDF/Powerpoint format. Price: GBP999.00

Abstract

Over the last three months ResearchFarm has conducted an in depth analysis of the chances of success of various tactical and strategic responses to the discounters, including:

• relaunched private label propositions
• price wars
• discounter launch or acquisition
• co-location
• convenience retailing
• online retailing and
• raising buying synergies

The recommendations and conclusions are based on historical evidence and include case examples from Belgium, Denmark, France, Germany, the Netherlands, Poland, Spain and the UK.

Broadly speaking we found that three strategies have failed to reach their aim. Three other strategies were quite promising, whilst on a seventh the jury is still out.

The report shows clearly what works and what - so far - has not.

In this report our consultants reveal some of their trade secrets and cutting edge thinking, which they have not shared with the wider sector before.

Table of contents

Executive summary p8
The context: EU Grocery Retailing in 2014 p13
Grocery sizes: EU 27, 2009-2013 in ‘000 €bn, e p14
Grocery sizes: shoppers cut back, shop around and go to hard discounters p15
Grocery sizes: EU 27, 2008-2013 growth in % p16
Grocery per capita sizes: EU 27 in 2013 in €, from Finland to Bulgaria p17
Financials and KPIs: Aldi and Lidl in 2014 p 18 Aldi: figures 2010 - 14, international contributions more important than domestic p19
Aldi Sued: 2013, sales per country in €m, market shares of total grocery universe in % p20
Aldi Nord: 2013, sales per country in €m, market shares of total grocery universe in % p21
Schwarz: sales 2008-13, growth, domestic share of total, LFL growth p22
Lidl: 2013, sales per country in €m, market shares of total grocery universe in % 1/2 p23
Lidl: 2013, sales per country in €m, market shares of total grocery universe in % 2/2 p24
Spot the difference: a tale of two discounters p25
The differences: format strategy, private label proposition, FMCG brands p26
The differences: SKU counts, financial performance, expansion policy p27
The differences: geographical spread, innovator and second mover p28
The differences: online strategies p29
Chapter 2: The private label relaunch p30
7 strategies: private label proposition relaunch p31
7 strategies: switch shoppers from brand to private label rather than losing them to Aldi p32
7 strategies: Tesco’s Discounter range, real’s no name products, French attempts p33
Recommendations: Is a private label relaunch effective? (1/2) p35
Recommendations: Is a private label relaunch effective? (2/2) p36
Chapter 3: launching a price war p37
7 strategies: poor visibility into discounters, early missteps p38
7 strategies: Hard discounters, 2013 UK stores data, 2020 forecast p39
7 strategies: Hard discounters average SKU sales in UK in 2014, price wars p40
7 strategies: Aldi and Lidl as biggest global buyers on SKU level p41
7 strategies: Walmart’s failed German expansion as a warning p42
Recommendations: Are price wars effective? (1/3) p44
Recommendations: Are price wars effective? (2/3) p45
Recommendations: Are price wars effective? (3/3) p46
Chapter 4: launching or acquiring a discounter p47
7 strategies: launching or acquiring a discount fascia, Edeka, Carrefour, Casino p48
7 strategies: launching a discount fascia, Edeka as an exception to the rule? p49
7 strategies: launching a discount fascia, Sainsbury’s and Netto p50
7 strategies: launching a discount fascia, Tesco’s One Stop p51
Recommendations: Is launching or acquiring a discount fascia effective? (1/2) p53
Recommendations: Is launching or acquiring a discount fascia effective? (2/2) p54
Chapter 5: The convenience opportunity p55
7 strategies: securing convenience store sites, stopping discounter expansion p56
7 strategies: the rise of click & collect, drivers of convenience success p57
Format strategy: Aldi convenience, the Kilburn Store in London p58
Format strategy: Aldi convenience, the EU opportunity p59
Lidl: revamping the store format towards a convenience fascia, focus on fresh and food p60
Lidl: low branded SKU count, the cash desk innovation p61
Lidl: drawbacks of the new model, analysis, cost drivers, space considerations p62
Lidl: new formats in Belgium, outlet store and inner city convenience p63
Recommendations: Is exploiting the convenience opportunity effective? (1/2) p65
Recommendations: Is exploiting the convenience opportunity effective? (2/2) p66
Chapter 6: The online push p67
7 strategies: the online push – opportunity as long as the discounters don’t engage p68
7 strategies: the online push, Colruyt, Netto, Mercadona p69
Dia: the first discounter to launch a click & collect service p70
Dia: cheaper than in store, faster than drives and €30 average baskets p71
Dia: catering to pedestrians, trial widened out, France only for now – now closed p72
Lidl: online relaunch p73
Lidl: online operations, huge branded non food presence online, international p74
Lidl: tackling the non food issue, easier at Lidl than at Kaufland p75
Lidl: online relaunch in Germany, coffee world, wine, pet foods, nappies etc p76
Lidl: online turnover figures in Germany p77
Lidl: online health & beauty launch, private label and FMCG A brands, multichannel p78
Lidl: the future potential, h&b online p79
December 2014: Lidl launches Deluxe online in Spain p80
Recommendations: Is pushing an online proposition effective? (1/3) p82
Recommendations: Is pushing an online proposition effective? (2/3) p83
Recommendations: Is pushing an online proposition effective? (3/3) p84
Chapter 7: collocation and footfall sharing p85
7 strategies: co-location with a discounter – Aldi and dm, the footfall draw p86
Aldi Sued & Rewe: teaming up in Germany, creating destination status p87
Aldi Sued & Rewe: From competition to cooperation p88
Recommendations: Is co-location with a discounter effective? p90
Chapter 8: raising efficiencies in buying p91
7 strategies: raising synergy effects in buying, Casino, ITM, Auchan, Systeme U, Carrefour, Cora p92
7 strategies: private label excluded, will this affect Lidl or Aldi? p93
7 strategies: France the anomaly, as discount channel loses share… p94
7 strategies: …but not Aldi and Lidl (only Dia, Netto and Leaderprice) p95
Recommendations: Is raising synergies in buying effective? p97
Sources p98
Charts and Tables Table 1: Grocery sizes: EU 28, 2009-2013 in ‘000 €bn, e p14
Table 2: Grocery sizes: EU 28, 2011-2014 growth in % p16
Table 3: Aldi: figures 2010 – 14 (€bn), international contributions more important than domestic p19
Table 4: Aldi Sued: 2013, sales per country in €m, market shares of total grocery universe in % p20
Table 5: Aldi Nord: 2013, sales per country in €m, market shares of total grocery universe in % p21
Table 6: Schwarz: sales 2008-13, growth, domestic share of total, LFL growth p22
Table 7: Lidl: 2013, sales per country in €m, market shares of total grocery universe in % 1/2 p23
Table 8: Lidl: 2013, sales per country in €m, market shares of total grocery universe in % 2/2 p24
Charts 1 & 2: Grocery sizes: EU 27 2008-13 growth in % p17
Chart 3: Aldi Sued: 2013, sales per country in €m, market shares of total grocery universe in % p20
Chart 4: Aldi Nord: 2013, sales per country in €m, market shares of total grocery universe in % p21
Chart 5: Lidl: 2014, sales per country in €m, market shares of total grocery universe in % 1/2 p23
Chart 6: Lidl: 2014, sales per country in €m, market shares of total grocery universe in % 2/2 p24
Chart 7: Differences between Aldi and Lidl, key takeouts p17
Chart 8: Hard discounters, 2013 UK stores data, 2020 forecast p38
Chart 9: Hard discounters average SKU sales in UK in 2014 p39