The UK supermarket price battle is heating up. That’s according to media reports of Asda’s revitalised Rollback strategy, with the grocer slashing the prices of 1,500 ‘family favourite’ products in an effort to halt a sales slide. Meanwhile, new research reveals sales of own-label and challenger products are growing, while sales of market leaders are in decline.
Add in the proliferation of loyalty schemes and price-matching promotions, and the fact that small to medium sized businesses now hold a growing 15.1% share of the UK FMCG sector, and the UK retail landscape is perhaps more competitive than ever, writes Katrina Bishop, UK Thought Leadership Activation Manager at NielsenIQ UK & Ireland.
To thrive, FMCG brands have to disrupt. They need to be first with the best ideas, or study successful challenger brands to glean new strategies. It all boils down to the age-old question: how can brands and retailers convince the shopper to pay a higher price?
Only innovation can justify an increase
The battle for business has sparked a swathe of compelling new retail concepts.
Earlier this year, budget supermarket chain Lidl announced plans to open its first-ever in-store pub in the UK. Meanwhile, Sainsbury’s recently unveiled its new convenience store format, featuring self-serve lockers, energy-efficient refrigeration and digital promotion screens. The supermarket has also introduced speedy scan & go checkout technology, while Morrisons has taken a different approach, enabling retirement communities to order doorstep deliveries over the phone.
As retailers evolve and disrupt, brands themselves must keep pace. And like supermarkets, brands targeting sustainable growth should first ask: are we doing enough to attract consumers?
Take four of the UK’s top 10 growing brands in terms of units sold: Hula Hoops, Lurpak, Guinness and Persil, who have all done better in terms growth compared to the previous year. But alongside strong distribution, they’ve all introduced successful innovations—from non-HFSS (high in fat, salt or sugar) ingredients, plant-based alternatives, 0% alcohol versions or more economical wash cycles—that have boosted their relevance to key trends in retail.
Challengers v market leaders: Two paths to grow
Brands who truly justify their products’ value can drive sustainable volume growth. Some challengers are even outpacing market leaders, despite their premium pricing. Take Tony’s Chocolonely, which uses its core identity to demonstrate that the higher price is for a good cause—in this case, eradicating exploitation in the cocoa industry. It’s since grown in value year on year while charging more than rival chocolate makers.
In fact, store unit sales of challenger and own-label branded products are both up 1% year on year, while sales of top companies have fallen 0.9%. To drive premiumisation, secure shoppers’ trust and gain market share, brands must follow different strategies to stave off the competition:
• Challenger brands have yet to win over the majority of category shoppers. They should focus on breaking into established retail channels, challenging market leaders and seizing the biggest revenue opportunities.
• Leading brands must defend against the appeal of challenger brands to protect core revenue streams. Simultaneously, they must identify growth opportunities in emerging channels to keep up with rapidly changing shopper preferences. What can they learn from challengers? What does their success reveal about new consumer preferences? What are the new routes to reach shoppers?
Technology is merging physical and mental availability
Regardless of whether your brand is a leader or a challenger, staying on top of both physical and mental availability is crucial. Traditionally, retailers and manufacturers had to balance these two brand health indicators separately. But what happens when technology merges them?
Enter retail media, perhaps the most disruptive trend in marketing.
Retail media is reshaping marketing budgets and is set to account for a quarter of global digital spend by 2026. Today, retail media networks from the likes of Tesco and Boots can serve a consumer an ad and see them check out just a few taps later. Powered by membership card data like Tesco Clubcard, brands can also target consumers based on actual shopping behaviour, delivering the right message at the right time with precision. Ads can even be hyper-personalised to individual consumers through generative AI.
To top it all, the sales performance of retail media can be measured far more accurately than other mainstream channels. Brands benefit from seeing the actual sales uplift, repeat purchases and full campaign ROI. It’s why many more are testing, learning and scaling in this area.
Ultimately, the UK retail landscape is shifting fast. Supermarkets are warring on price; challenger brands are gaining ground and technology is reshaping consumer behaviour. To stay competitive, brands must justify any higher pricing through impactful innovation. Partnering with premium data providers will prove crucial to unlocking full grocery sales insights, developing lucrative strategies and optimising marketing campaigns. In the competitive world of retail, it’s the game changer that helps you to get ahead.
Comments are closed.