Walking stores in Singapore, Dubai and major cities in the UK last month highlighted the different approaches major retailers take to balancing their own margin needs with the shoppers’ needs for a great experience in store. And retail own brand has become the inflexion point.
It is an interesting visual journey when you fly between cities or countries with the sole intention of looking for trends and differences in each sector of retail. The grocery sector, with its large range of products and the mix of retail own brand and big brand packaging, allows you to see quickly the impact of how this strategy is effecting the experience of shoppers.
Singapore has many small format grocery stores full of movement and colour, with many building displays featuring the Formula 1 theme as the race was in town that month. Good, entertaining retail: Much like most of the modern grocery retailers in countries outside of the US and Europe.
Two days later I walked into a Carrefour Hypermarket in Dubai and almost had sensory overload. The colours and smells were amazing with a large display of fresh spices supported by wooden trestles of vegetables and cheeses. Deeper into the store was lots of colour with a wide range of international brands in pallet stacks.
Big displays always lift sales in any retail environment, as shoppers are drawn to the big brands’ colours and packaging patterns they recognise and respond to – and usually buy one just because it’s there. Sounds simplistic, but big brands still give shoppers a sense of trust and elicit an emotional response in a far greater way than any retail own brand. So if you remind them about these brands in a big display in store, they buy even if they don’t need the product. And the Nutella display in Carrefour was one of the largest I have ever seen in retail. I’m not a tall bloke and it towered over me!
So from an amazing place full of colour and entertainment, two days later I then walked UK grocery stores. Many of them. And sadly I was left with a feeling of monochrome uniformity. Retail own brand is now such a large part of some UK retailers’ offerings, that walking along some aisles you are confronted by so much similarity, albeit beautifully lined up and displayed, it’s just visually boring. Truly flat. It was a huge shock to go from one grocery store format to another.
Now I know that retail own brand is an important part of the retailer’s profit mix and offering to shoppers. However, when it goes too far, the shopper exchanges low prices for more entertainment and low choice in store. And if I spend an hour a week in a grocery store shopping, I do want it to be a good experience.
Funnily enough, when walking ALDI and LIDL stores, where 90% of the packaged products on display are their own brands, the effect was one of colour and noise. Even though there is a much smaller range of products on sale, these aisles feel busy and buzzy. A conscious decision to design each product as a standalone brand, not part of a retail own brand range with the retailer’s corporate colours as the base of the design, has delivered colour and choice in the shopper’s mind, and at low prices. I’ve seen this in Trader Joe’s, ALDI’s mid-market stores in the US, too.
When shoppers shop, their needs don’t really change. They are attracted to authentic experiences: the smells of spice displays, wooden trestles of fruit and vegies, giving a market-like feel to the store. And like this sensory market experience, they are stimulated by colour and choice, which entices them to buy. A mix of big international brands does that, as does a mix of retail own brands designed apart, not as a suite of similar coloured boxes.
ALDI and LIDL are two retailers who have successfully struck the balance between having retailer own brands with less emotional connection with the shopper than big international brands, but presenting them in a way that delivers an appealing experience for shoppers. I have to say, I can see why these two retailers are growing so fast and the mainstream grocers are declining. There’s authentic colour and noise in these stores, as opposed to a formulaic retail own brand marketing strategy.
Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings.