Price matching is history, what’s next for supermarket wars?

For years, supermarkets have been fiercely at war over price. At one time, BOGOFs and other price promotions were king and were the key way for one grocer to set themselves above the rest.  Asda were one of the first grocery retailers to put PRICE at the heart of their marketing strategy, with the famous ‘tap tap’ advert and the strapline “Asda Price”.

At the beginning of this decade the focus begun to change and a price matching war began. This was not something brand new to retail as a whole, with John Lewis running its long term ‘Never Knowingly Undersold’ promise since 1925 (although their online price matching started 2010). The speed at which price matching spread across the grocery market was previously unseen.

Asda Price



The big four (Tesco, Asda, Sainsbury’s and Morrisons) started launching their own versions of price matching in quick succession between 2010-2013). They were all slightly different, but were all ultimately implemented to communicate that their customers had no need to shop elsewhere. They guaranteed the best price on their products (particularly branded products) so that customers always got the best deal. Prices no longer became a differentiator, when customers could get the same price regardless of which of the big four they shopped at.

Meanwhile, Aldi and Lidl were pushing a simple price message – shopping with them was consistently cheaper, driven by low prices, rather than a focus on promotions or vouchers. This no-gimmicks messaging was well received by the UK grocery customer and has played a central part in their impressive market share growth ever since. However, interestingly, the concept of always low pricing didn’t work so well for Tesco when they launched their ‘Big Price Drop’ in 2011, followed by poor Christmas sales and the first profit warning in 20 years.

It’s fair to say that the discounters have had a profound impact on the grocery sector, and in parallel with their growth, schemes from the big four such as Sainsbury’s Brand Match started to be scrapped. This was all in a bid to give customers what they now wanted – a shopping basket that was consistently lower in price. Price now appears to have been removed from the hands of the ‘big four’ grocery supermarkets and into the territory of the discounters.

So what’s next for the big four? How will they try to take the lead going forward? I believe price wars are exhausted, and although savvy shoppers appear to have stayed following the credit crunch, the constant pushing down of prices is damaging the market. I think the time has come for the big four to tell the British consumer a different story.

AsdaPrice guarantee



We are all increasingly time poor, so offering ways of speeding up grocery shopping and fitting it into busy lifestyles may be the way forward. “Convenience” retailing, in its current sense within the market, has been very successful. Convenience store numbers have grown quickly, up 21% in five years, trumping the large store formats. We know that the proportion of consumers completing one main weekly grocery shop are diminishing – small shops throughout the week are become the ‘normal’ grocery shopping behaviour.

However, as my colleague Amy has recently discussed, convenience retailing (in the sense of small format stores being located conveniently in the local area), is at saturation point, so what more can the supermarkets do? A new type of convenience is required to succeed in this tough grocery market – one that focuses on integration with everyday life, particularly with the diminishing ‘weekly shop’. The recent launch of Amazon Fresh is likely to drive supermarkets to adjust their offerings to compete with a likely highly convenient offering.




I believe there are many ways that the big four can integrate convenience further into their offering:

  • Click & collect options in all store formats, including convenience stores. For many, convenience stores are becoming destinations for bigger shops and not just ‘milk & bread’ missions
  • More external collection points, similar to Amazon Lockers. A partnership with Barclays to put lockers in bank branches earlier this year is a promising sign
  • Embrace paying technologies on mobile phones, eradicating the issue for the checkout queue (so long as customers use scanners such as ‘Scan as you shop’ at Tesco)
  • Improve delivery services, so that the times of delivery are plentiful, precise and can be tracked, so that consumers never have to wait or be left uncertain as to its arrival




Previously, I discussed the concept of ‘destination shopping’, the growing trend for retail and leisure to be combined – this is still very much a trend of the retail sector in its entirety. With the options for shopping online now plentiful, stores are having to provide an edge; a reason for a customer to visit rather than ordering online from the comfort of their home.

Offering additional reasons to visit, aside from the core mission of completing a grocery shop, supermarkets would be wise to provide a further justification for visiting. Not only can leisure options act as a draw – perhaps a restaurant or gym, but other services such as delivery pick-up/drop off or ticket collection would make a store ‘sticky’ for repeat and frequent visits.



Ultimately customers will always crave human interaction. The in-store element of grocery shopping will always be important, despite the growing popularity of online shopping. In particular, many customers will always want to look at, smell and touch the food they plan to buy. But for some, this won’t be enough, meaning that stores will need to offer more – one way to do this is to convert the shopper’s mission into an experience. Experience, like convenience, can be understood in the traditional sense, with a focus on the customer service staff provide. This, of course, is still vital to get right, but it’s a given.

To go further than this, I believe the grocery retailers need to harness the use of technology and provide an experience that is personalised to their customers – this is tricky in the grocery sector because of the high volume of customers compared to other retail sectors. Some of the retailers already collect information from their customers, including what they purchase, and use targeted marketing including personalised vouchers.



The use of in-store personalisation could take this a step further, using geo-fencing to send personalised recommendations when the customer registers as being in-store via GPS or NFC in-aisle to find out more about products. A greater challenge will be for those customers who have not signed up for the grocer’s scheme, or for the grocery stores that do not collect such data. Interactive touch screens around stores have been used sparingly but could be used more to show recipe ideas and food combinations, all with the aim of helping consumers to try something new, without much effort.

Although price will never disappear as an important factor for the grocery shop consumer, I believe a change in focus (particularly for the big four) is necessary. There are many strategies, including those that I mention in this article, that grocery retailers can use to set themselves apart from the rest. The arrival of Amazon Fresh is also likely to cause disruption and is something we will be watching carefully (along with many other people from the looks of Google Trends!)

Amazon Fresh Google Trends

Becca Allen is a Research Manager in the retail & customer experience team. She uses her wealth of experience working with leading retailers, in and outside of the grocery sector, to measure how well they perform on their KPIs, to establish current customer perceptions of how they perform and address how these can be further improved.


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Becca Allen
01962 842211
Article date - 12/08/2016
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