This document discusses the rise of discount grocery stores and their impact on the grocery industry. It notes that discounters have gained significant market share by offering low prices. This has put pressure on traditional grocery stores and suppliers to lower costs. To compete, grocery stores have invested over £1 billion in price matching. The document provides strategies for suppliers to maintain value in this environment, such as rational price positioning and establishing pricing structures that support discounters' strategies. It emphasizes taking a proactive rather than reactive approach to pricing.

1. RISE%OF%THE%DISCOUNTERS%
A%winning%formula%to%naviga<ng%the%grocery%market%

2. %
CONTENTS%
%
%
1. The%rise%of%Discounters%
2. The%longFterm%impact%
on%the%industry%
3. An%effec<ve%way%to%take%
leadership%in%price%
posi<oning%
4. How%to%find%out%more%

3. %
CONTENTS%
%
%
1. The%rise%of%Discounters%
2. The%longFterm%impact%
on%the%industry%
3. An%effec<ve%way%to%take%
leadership%in%price%
posi<oning%
4. How%to%find%out%more%

4. As#the#retail#price#wars#evolve,#suppliers#will#come#under#con5nuing#pressure#
to#grow#value#simultaneously#across#all#channels
What#are#the#challenges?
! Long#term#price#defla5on#
erodes#profit#margins
! Short#term#reac5onary#tac5cs#
have#a#knock#on#effect#in#the#
market,#eroding#further#value
! Price#match#guarantee#&#
promo#promiscuity#
intensifying#trade#spend#
pressure
! Evolving#price#war#further#
dilu5ng#brand#loyalty#and#
reducing#ability#to#charge#a#
brand#premium
GROCERY
DISCOUNTERS
CONVENIENCE
Profit&
erosion&
Q Price#defla5on#as#other#channels#
expand#their#convenience#offering
+ Price#consor5ums#benefiTng#
from#scale#to#rebalance#supplier#
nego5a5ons
+ Rapid#share#gains
+ High#shopper#value#
percep5on
Q Moun5ng#profit#concerns
Q Hypermarkets#losing#trac5on#in#
favour#of#smaller#formats
Q Shrinking#ability#to#command#a#
premium#for#branded%products
Channel#leakage

5. %
CONTENTS%
%
%
1. The%rise%of%Discounters%
2. The%longFterm%impact%
on%the%industry%
3. An%effec<ve%way%to%take%
leadership%in%price%
posi<oning%
4. How%to%find%out%more%

6. PRICE&DEFLATION&&
IS&HERE&TO&STAY&
Consistent#compe55ve#pressures,#wage#
defla5on#and#shopper#value#percep5on#will#
further#erode#prices%
DISCOUNTERS&ARE&THE&NEW&
PRICE&BAROMETER&
Morrisons#will#be#joined#by#their#compe5tors#in#
price#matching#against#the#discounters,#as#a#new#
price#floor#is#established
TRADING&WILL&ONLY&&
GET&TOUGHER&
Retailers#will#expect#suppliers#to#fuel#the#
price#war#through#increasing#trade#
investment
2006
Introduc5on#of#loyalty#schemes#
and#targeted#consumer#
promo5ons#led#to#rapid#value#
growth#in#the#top#4
2008
Recession#severely#affects#
average#basket#spend#and#
promo#promiscuity,#
eroding#value#in#branded#
products
2009
Crea5on#of#revenue#growth#
func5ons#allowed#companies#to#
improve#net#price#realisa5on#
through#quick#wins
TODAY
Big#four#invest#over#£1bn#in#price#war
Discounters#gain#significant#trac5on#
across#the#consumer#landscape
Retail#sales#value
Manufacturer#gross#margin#%
Amid#the#rise#of#discounters#value#growth#will#remain#
5ed#to#pricing

7. %
CONTENTS%
%
%
1. The%rise%of%Discounters%
2. The%longFterm%impact%
on%the%industry%
3. An%effec<ve%way%to%take%
leadership%in%price%
posi<oning%
4. How%to%find%out%more%

8. Leading#in#pricing#&#winning#in#the#discounters#era:#What#you#
can#do#to#retain#value?
Achieve#a#well#considered#and#ra5onal#consumer#price#
posi5oning#and#corridors;#groceries#VS#discounters#first#and#
foremost
Establish#the#right#enablers#to#implement#a#defensible#pricing#
structure
Sales#director#need#to#lead#the#way#in#changing#the#mindQ
set#of#the#business#towards#channel#pricing#leadership
1%
3%
4%
Ascertain#your#future#role#as#a#category#and#as#a#business#
within#the#discounters’#overall#strategy
2%

9. Sales#director#need#to#lead#the#way#in#changing#the#mindQset#
of#the#business#towards#channel#pricing#leadership
1%
TODAY% TOMORROW%
AdapAve&approach&&
Less&reacAve&
approach&than&in&
the&past&but&
pricing&and&
promoAon&
decisions&sAll&
heavily&adapAng&to&
customer&
landscape&&
&
PreKempAve&
approach&&
New&mindKset&
across&the&
business&in&seMng&
price&posiAoning&
and&clear&level&of&
accountability&in&
the&team&as&to&
who&manages&it&
Cultural#Shif#to#
empower#NAMs#to#
make#effec5ve#and#
considered#channelQ
wide#decisions
A
Having#the#right#
tracking#and#measuring#
mechanism#to#provide#
relevant#insights
B
Embedding#price#
posi5oning#as#a#cri5cal#
step#in#the#sales#
planning#cycle
C
YESTERDAY%
ReacAve&
approach&&
Pricing&and&
promoAon&
decisions&taken&
in&response&to&
external&events&
&
&
&RESPONSIVE%TO%CUSTOMER%CHANGES%
IN%PRICING%STRATEGIES%
PROACTIVE%
STRATEGY%
MANAGEMENT%

10. Ascertain#your#future#role#as#a#category#and#as#a#business#
within#the#discounters’#overall#strategy
2%
Apply&analyAcal&rigour&to&fully&understand&and&monitor&the&discounter’s&point&of&
view&of&the&FMCG&world&via&a&mix&of&primary&research&and&secondary&data&
analysis.&Clarity&on&their&prioriAes&will&beSer&inform&your&price&posiAoning&
decisions.%
% How%do%they%iden<fy%
their%main%
compeAtors?%
What%are%their%na<onal%
plans%in%terms%of%
geographical&expansion?%
How%do%they%want%to%price&
posiAon%themselves%in%the%
market%and%how%can%we%
support%the%execu<on%of%
their%pricing%strategy?%%
What%shopper&
segments&are%they%
aWer?%How%are%they%
changing%their%inFstore%
customer%experience?%%
What%role%does%the%UK%
market%play%in%the&group&
global&growth&strategy?%
What%level%of%margins%are%
they%prepared%to%operate%
within?%
What’s%the%role&of&
premium&brands&VS%
private%labels%in%
their%overall%brand%
strategy?%
What%are%their%overall%
assortment&prioriAes&for%
the%future%(breadth%and%
depth),%outside&the&
beverage&category?%
To%what%extend%are%the%
willing%to%dilute%their%
model%by%trading%up%their%
merchandise&assortment&
to%higher%quality%
products?%%
What%are%their%shopper&
engagement&programs&
and%how%can%we%support%
them%via%pricing%and%
pack%decisions?%%

11. Achieve#a#well#considered#and#ra5onal#consumer#price#posi5oning#
and#corridors;#groceries#VS#discounters#first#and#foremost
3%
! Ensure#consistent#Target#Price#
posi5oning#across#channels#and#
against#compe5tors#in#order#to#
achieve#financial#ambi5ons
! Clear#channel#and#customer#roles#in#
the#current#landscape#and#within#
future#trends
! Determine#pricing#rela5onships#in#
the#market#and#iden5fy#key#product#
baglefields#for#customers
! Assess#the#impact#of#channel#
leakages#and#iden5fy#the#most#
material#products
DICOUNTERS%VS%GROCERY%STORES%PRICE%POSITIONING%
Do#Grocery#and#Discounters#need#to#be#in#the#
same#corridor?
Do#we#need#to#differen5ate#the#packs#so#that#
they#don’t#conflict?%%

12. Establish#the#right#enablers#to#implement#a#defensible#pricing#
structure
4%
! Define#the#right#structural#pricing#to#
help#achieve#and#manage#the##
consumer#price#corridors#in#the#
market
! Structure#the#pricing#to#your#
customer#in#line#with#how#you#want#
them#to#behave#in#the#market.
! The#key#is#to#contrast#customers’#
strategy#:
– Whom#they#are#trying#to#compete#
with?
– What#do#they#want#to#price#posi5on#
themselves#in#the#market?
– What#level#of#margins#are#they#
prepared#to#operate#within?
Lidl% Asda%
List#
Price#
Net#
Invoice#
Price
Triple#
Net#
Price
OnQInvoice#
Discount
Promo#
Investment
Terms
Use&Rate&Card&Pricing,&promo&and&trade&
investment&by&customer&to&support&price&
posiAoning&

13. %
CONTENTS%
%
%
1. The%rise%of%Discounters%
2. The%longFterm%impact%
on%the%industry%
3. An%effec<ve%way%to%take%
leadership%in%price%
posi<oning%
4. How%to%find%out%more%

14. Interested?#How#to#find#out#more…
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Europe&to&create&growth&strategies&that&sustain&longKterm&growth&&&leave&lasAng&legacies&
+44#7521#012#923
info@fifhQp.com

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