Home / Advertisers / Paul Simons: big changes ahead for UK supermarkets – is it time for SainTesco or TASDA?

Paul Simons: big changes ahead for UK supermarkets – is it time for SainTesco or TASDA?

The news on Sainsbury’s results and gloomy trading forecast (notwithstanding the warm glow from its Christmas campaign) underlines the shifting sands beneath the main players in the UK grocery market. It feels like a market close to saturation with little or no growth, leading to the only answer which is to fight for brand share.

It’s a dog eat dog scenario.

sb_brand_refresh_1Both Sainsbury’s and Tesco have put a hold on property development, in particular large out of town superstores. They claim, understandably, that more and more of us are going for more regular shopping at our local stores rather than the mega shop once a week. Plus, of course, we have home deliveries now a major feature of grocery.

This Christmas also has all the making of a bloodbath with the serious impact of more brands going for the same business. Aldi and Lidl appear to be taking share from the middle ground occupied by Asda, Morrison’s, Tesco and Sainsbury’s as well as nibbling away at niche areas of Waitrose and M&S.

The new reality for the top management of the big players is that this is the future – therefore some serious thinking is required. It isn’t a blip about to correct itself, it is a trend that has all the hallmarks of a seismic shift in the structure of this market in the UK. Five years from now we are highly likely to see a very different landscape to the one we have known for decades.

Clearly top-down policy changes will be necessary for most of the major players which, in turn, fall to the marketing managers and then their advertising partners to execute.

In other sectors we have seen competing brands join up, e.g Dixons’ Curry’s and PC World at a brand level and Carphone Warehouse and Dixons in a merger. So maybe the same will happen in the grocery retail market? It makes sense if there isn’t sufficient volume to go around. How about TASDA or SainTesco for example?

If this kind of market rationalisation does take place it would at least provide lots of work for the wider advertising sector, with new designs needed for all those new logos and brand new advertising campaigns. Branding consultancies overworked with the merging brand names, new websites to be developed and loyalty programmes reworked.

Warren Buffett said recently he had made a big mistake in betting on Tesco, so I suspect there are many smaller investors as well as big institutions watching this situation unfold. Both Tesco and Sainsbury’s have had serious financial hits in recent months and M&S isn’t out of the woods by a long way.

Meanwhile other, newer brands are making hay whilst the sun shines. Oo-er missus, where will it all end?

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About Paul Simons

Paul joined Cadbury-Schweppes in brand management and then moved to United Biscuits. He switched to advertising in his late 20s, at Cogent Elliott and then Gold Greenlees Trott. He founded Simons Palmer Denton Clemmow & Johnson in the late 80s, one of the leading creative agencies of the 90s. Simons Palmer then merged with TBWA to create a top ten agency. Paul then joined O&M as chairman & CEO of the UK group. After three years he left to create a new AIM-quoted advertising group Cagney Plc. He is now a consultant to a number of client companies. Paul also shares his thoughts on his blog. Visit Paul Simons Blog.
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