This isn’t the first time I’ve looked at how discounters are changing the face of retail. In an earlier post I looked at how FMCG brands differentiate themselves in grocers and in another how they could activate Christmas.
The retail environment is in a state of flux. Retail brands seek to reinvent themselves and chase the discounters or alternatively position themselves far away from discounters and heavily reinforce the quality message.
In this blog we’ll compare recent visits to two retailers. Iceland’s Food Warehouse concept is relatively new, with 14 locations across England and Wales. Billed as ‘a unique new concept that offers an exceptional range of frozen, chilled and fresh food, groceries and household products – all at great value prices’, it positions itself as a larger format Iceland with a more bulk offer, with some luxury products. Certainly a unique market position – but what’s it like to shop there?
Comparing and contrasting in this blog will be the Morrisons in-store experience. Morrisons has famously taken a back to basics approach, selling off its convenience store estate, fading out its fresh produce misting machines, dropping all branded POS and investing in pricing. But how does the shopping experience feel?
Iceland Warehouse first then – we visited the Banbury site, in the middle of a weekday. The first thing you see on approach is large FOS posters, advertising case deals on branded items. This immediately gives the impression that this is a place you can bulk purchase brands you love and trust. So a great opportunity for FMCG brands to sell large volumes. The next thing you see is a market stall style fresh produce display, selling, in this case large packs of potatoes and strawberries. So the first three key messages are ‘Bulk’, ‘Brands I trust’, ‘Fresh’. A good start.
The feel of the store is very much a warehouse. No frills but clean, white, clear and airy. The heavy emphasis on frozen meant rows and rows of chillers with little signage on how to navigate the aisles from a distance, though as you got closer, lightboxes on top of the freezers signposted contents. However, it turned out that the fun was in discovering what was in the chillers. Like these kangaroo burgers.
Mid aisle, wire dump bins highlighted offers on ambient branded products – this is clearly much more than a frozen warehouse. Interestingly the wide aisles and high ceilings gave the impression of space, so these wire bins added to the experience rather than providing clutter.
There were several surprises in store. Firstly this excellent and well-signposted Free From section – demonstrating this concept is far more than ‘pile it high and sell it cheap’.
Secondly, a highly branded ‘Slimming World’ freezer. Finally, a chance to put branded POS on freezers! The POS was food-led (as opposed to pack shot and price), which added richness to the shopper experience. A clear deal on the freezers themselves added further value. Some great frozen shopper marketing here.
Finally, though we couldn’t stop to see it in action, an in store sampling stand was being set up for hot food sampling – which we interpret as a way of creating interest, and trust, in own brand sales (perhaps crocodile burgers?)
All in all, in our opinion, a good shopping experience. Dramatically different to anything else offered in the marketplace. A well-designed store, a tight range, some value offers, bulk offering, some premium and niche products - an effort to create trust in own brands, yet not positioned as ‘cheap’. Leaving here felt like you had discovered a little secret retail gem, finding exciting products and getting value for money. There are clearly opportunities for branded manufacturers who can work within Iceland’s guidelines, or have a bulk/ WIGIG offer and plenty for innovative private label manufacturers.
Then we went straight to Morrisons. This is a store we have visited many times before, however not recently.The fresh produce mister had been removed, leaving a more functional feel to the fresh produce area, but still value.
There was a notable lack of branded POS, with all marketing messages focusing on the value offer, selling large packs at clear price points. Cruising the power aisle, it felt like a hard discounter.
However, while there was no media centre printed POS for brands, there were numerous fully branded shippers in the aisles. Some blocked fixtures, some were well shopped, some well stocked, but they did add to a level of clutter, and while disruptive, in that they disrupted traffic flow, they didn’t seem merchandised to entice a purchase.
Clearly one of the main differentiators between a discounter and a supermarket is the range and the breadth of choice offered. There was no noticeable range reduction, thus a huge choice of brands vs. a discounter. But whereas Morrisons used to focus on its fresh offer, or Market Street, or its supply chain credentials, the emphasis in store is squarely on price. However due to the breadth of range, it feels like the pricing is on the gondola end offers, not on products across the range, which is the strength of the discounters.
The new in store POS itself was more of a surprise. Hard to convey on a photo, but the black on yellow felt basic, and even the paper quality conveyed subliminal price messaging.
The overall message felt like the quality messages Morrisons used to dial up had been stripped back to focus on price, but outside of key benchmark offers, the pricing on the rest of the range hadn’t changed. Together with the clutter in the store, this felt confusing. I would question if shoppers would understand and respond to the positioning? The opportunities in store for branded manufacturers focus on price points and gondola ends, though clearly some manufacturers have arranged shippers in store?
In summary, we see Iceland’s new Food Warehouse concept taking bulk purchase plus some hidden surprises and putting it in a well-thought through shopping environment, dialling up key value, brand, bulk, quality and fresh messages to offset the fact that c 70% of the floor space is devoted to closed freezers. In contrast Morrisons felt confused - a discounter in parts, actually expensive in others, with all the quality messages Morrisons used to trade on stripped back. It’s tough in the mid market, clearly – but given the choice, I know where I’d shop.
How about you?