Christmas 2017 - Price
23 December 2017
Price at Christmas
Intriguing that price plays such a part at Christmas, for years it was always the time where customers threw off their shackles and spent more.
They still do of course, but the market is very much 2017 'AD', that is, after discount.... Discounters reset many, many perceptions around the relationship between price, product quality and own label.
Recent developments have seen them move in to the premium own label space and happily reset even more perceptions and expectations in this space.
This spells bad news for the mainstream retailers who used to have a gap on premium ranges and therefore could attract customers back to their stores for Christmas, Easter and other big occasions. However with discounters growing premium ranges on an ongoing basis, alongside their 'specials' that arrive at Christmas.... That gap has narrowed.
However as we've seen previously, discounters can over cook their offer and pump too much gear in to the stores. Premium is a fine balance but the discounters do a decent job at Christmas with it. They have to, as the risks are huge of customers disappearing elsewhere for the 'big shop'.
One such retailer who has struggled with price perception in recent week and months are M&S, who have always been known for their premium pricing but have come under pressure from discount, market competitiveness and also inflation running riot on Fresh Foods.
Cheaper than last year?
One M&S campaign seems to centre around their food being cheaper than last year, with a radio ad flagging that 'no one is £10 cheaper than last Christmas'.
However why would a retailer open themselves up to any swift response or cynical ad by stating that things are so much cheaper?
The challenge for M&S is by stating things are so much cheaper, it looks like they were, in turn, far more expensive last year.... Equally; you could argue they're still £30 more than anyone else...... It's intriguing that M&S are continuing to highlight price in such a way around the market, whilst they do have challenges on value, I think it's often about sorting out the real insult pricing, rather than advertising you're slightly less on party food than you were last year.
Whilst there is a value question, Veg at 20p at Asda doesn't really aid their efforts when they're still at a significant price premium.
However customers wouldn't expect cheaper Veg necessarily, but more lower pricing around the store.... But it's a delicate balance...
To conclude
Value and price remain so important in the marketplace, and for M&S to be flagging lower prices, and then flagging that party food lines are not at the higher prices they were in 2016. Whilst M&S are renowned for their luxury foods, they're not always known for low prices, but should they be? Value and quality are intrinsically linked, discounters have changed the balance here..
But yet, despite the talk on price and the various messages around the stores... They are then charging £20 for a hand decorated wreath, where comparable products (at least in a look / feel sense) are £10-£12.
This is where there is a disconnect from M&S, you have be relatively A1 when talking about price and value. It has to make sense to a customer and to bring price in to the spotlight means examples like the above just can not occur.
It is Christmas, it is M&S but that product, whilst great isn't representative value for many customers at £20. For some it will be, and they'll be prime M&S customers and happy to pay the premium.
But for customers who M&S are trying to attract, with stories of value and lower prices, but still offers of innovation at affordable, trade up prices. There has to be a consideration for the middle ground and ensuring that any price messaging, isn't lost on products that are high in price and could be considered too aspirational....
Upcoming emails
Christmas is nearly here! Grocery Insight will be busy digesting what we've seen around the stores and what went well, or indeed, not so well for the retailers and for the market as a whole.
Key themes so far are "the return of Cheap Veg", "A very value driven season" and "premium in abundance at discounters once more". Further emails will follow over the festive period to review what's occurring and what the new year may hold for retailers.
Don't be a Turkey!
Grocery Insight produce numerous Christmas documents for clients within retail, supply and the investment community. With thousands of images from the stores and unique takeaways from our countless store visits.
For more information, please reply to this email to discuss your requirements.
From the Grocery Insight newsletter archive, first sent to subscribers on 23 December 2017. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.