There are certain catch-phrases in business that really ring true, and ‘Primark and Prada’ is one of them – namely, that an economic downturn sees middle-market brands rot while luxury and low-end thrive, buoyed by swathes of people who need everything cheaper, as well as the select few who, despite a recession, really couldn’t care less what they’re paying.
And two of the country’s biggest supermarkets are proving the adage again today. Both high-end Waitrose and bargain basement Morrisons have seen an 8.2% sales growth in the last quarter – steaming ahead of usual retail leader Tesco, which had only 5.3% in the same period.
Waitrose, in fact, has capitalised on both sides of the ‘Primark/Prada’ coin – it introduced an Essentials range earlier this year offering super-cheap prices on standard items (akin to Sainsbury’s Basics and Tesco’s Value ranges) which, The Times, met six-month targets in half that time.
But is just being super-high-end or discount-happy low-end enough to pull a business through the tough times? Of course not. The right costings have to be matched by a carefully engineered marketing strategy, so that customers actually know where they want to go for the prices they want to be paying. (After all, Morrisons’ price positioning isn’t that dissimilar to Asda’s, and Waitrose’s to M&S’s – but we’re not seeing those two supermarkets registering the same results.)
Morrisons CEO Marc Bollans told Telegraph Business he believed that the ‘fresh food’ Market Street concept is what is drawing customers to the store: every supermarket has a range of counters offering different types of fresh food, a selling point an ongoing TV advertising campaign has centred around.
For Waitrose, the aforementioned Essentials range has picked things up – again supported by advertising alerting consumers to its benefits.
The lesson? You might be in the right price range for an economic downturn, but that doesn’t mean you can get lazy about innovation. Pricing of course has to match consumers’ needs right now, but affordable prices have to be supported by other USPs (as a general rule of thumb, you should always have minimum five distinct USPs at any time). And once you’ve developed a marketing strategy that will draw customers to you rather than the competition (even when they have the same prices as you), you need to advertise it.
If you can afford advertising at times like these, when all around you are cutting back on it, you’ll be much more prominent than competitors. (As, very simply, there are fewer voices out there at the moment shouting to be heard.) Plus, ad costs are low at the moment, as advertising is always one of the first things to drop off during economic tough times, meaning you can nab yourself a bargain. reported today