Beef wars, Rip-Off Britain, genetically modified foods, bankrupt
farmers, the death of the high street, ethical trading - supermarkets
have hardly been out of the headlines this year, and mostly for the
wrong reasons. As if that wasn’t enough, two firm favourites - Marks and
Spencer and Sainsbury’s - have obligingly kept the spotlight on the
sector as the media decries their so-called falls from grace.
The ripples have even spread to board level, as supermarkets become
painfully aware of the importance of having someone at the top who is
seen to be driving positive change. Sainsbury’s chief executive Dino
Adriano kept his title, but relinquished control of the stores this
autumn to his deputy David Bremner, and Safeway abruptly replaced chief
executive Colin Smith after 20 years at the company with Carlos
Criado-Perez at the beginning of November, in a bid to boost its
So when news of Wal-Mart’s takeover of Asda hit the media this summer,
you could forgive any supermarket corporate affairs director for crying
into the till, as the press trumpeted the end of British supermarket
retailing as we know it.
Wal-Mart is not the first cut price retailer to set foot in the UK - the
likes of Aldi and Netto have been quietly increasing market share since
they arrived in the early-1990s. But the entrance of Wal-Mart isn’t
simply one more cut-price retailer on the scene.
Wal-Mart is the biggest retailer in the world, renowned for sourcing
pretty much anything from anywhere, at the cheapest price for its
What’s more, it does not gather market share by stealth but is ready to
shout long and hard about what it does best in order to blast away its
competitors. And, in this case, Wal-Mart’s strength is the Achilles’
heel of UK supermarkets - low prices in ’Rip-Off Britain’.
Mike Godliman of retail consultancy Verdict Research believes that the
flat-footed reaction to this tag when it first became popular meant that
retailers had already lost the initiative on the price issue before
’The UK supermarket retailers have not been good at speaking for
themselves. They could have argued a good defence on UK costs, but they
have missed a trick,’ he says.
No UK supermarket chain had strong ownership of the price issue, so when
Wal-Mart announced its purchase of Asda, it scored a double PR
It revitalised Asda as a fresh new player, distinct from the old guard
of supermarket retailers, and cashed in on all the PR capital that
surrounded its media perception of being the saviour of overcharged
Asda’s head of PR Nick Agarwal claims this helped to keep its edge over
Tesco and Sainsbury’s, providing a further platform for its value
’The deal with Wal-Mart has shaken up the industry and has been a
talking point. We may not be number one in terms of volume but we are
number one in terms of public perception,’ he asserts.
Other retailers are working on developing their media strategies, now
that Asda seems to have taken ownership of pricing - an extremely
important issue for consumers. The significant players in the market are
fighting back by finding out what customers want and then promoting it
back to them.
’We have interviewed consumers and our results show it’s not just about
price. First is range, second is convenience, and price is third. The
customer wants a total experience and won’t be fooled by just one part
of that,’ says Godliman.
This, according to Jane Howard, director of consumer specialist Jane
Howard PR, is where PR should come into play: in encouraging consumers
to scratch below the surface of the price message and look at the other
elements of what is on offer. ’Retailers need to make a bold move away
from price in their PR,’ she says.
This was quite obvious in the case of Sainsbury’s, which declined to
comment on PR strategy for this article, but had its fingers burnt over
the whole price issue. Its John Cleese-led ’Value to shout about’
campaign was widely-criticised in the media and was even perceived to be
offensive to Sainsbury’s staff. Accordingly, Sainsbury’s new ad campaign
’Making life taste better’ is a complete shift away from price, focusing
instead on quality.
But Tesco corporate affairs manager David Sawday says there has been no
change in the supermarket’s PR strategy of communicating on value,
quality, ’Britishness’ and service with personality. Although Tesco has
probably received more good publicity than its competitors, with its
high-profile battles in the European Court over the provision of branded
goods at cheaper prices, its message seems to have lost some strength
It is on this kind of evidence that Robert Phillips, founder partner at
Jackie Cooper PR, believes supermarkets have struggled to cope with
their new, high public profile. Their accountability is far removed from
the relatively genteel days of the early-1990s, and means coping with a
value-conscious public and a media which is all too ready to put the
In Phillips’ opinion, the best challenge to Asda’s supremacy so far has
come from the unlikely direction of erstwhile food retailer Iceland,
which he believes is at the top of the class in terms of its PR
Hilary Berg, Iceland’s new head of PR says this has been down to
recognising the importance of price but not letting it lead the debate
at the expense of all else.
’Wal-Mart’s appearance has put us in the middle of a supermarket price
war and means that we constantly have to reassure consumers that we
remain competitive on price. But we have been very careful to keep
long-term strategy in mind and to avoid being distracted by a
tit-for-tat exchange on pricing,’ she says.
And in formulating the long term strategy of building a brand which
encapsulates trust for the consumer, Berg has taken the lead from
consumers. ’The challenge is not so much communicating with the customer
as listening to the customer,’ she says. Much to the envy, no doubt, of
the PR strategists at its bigger competitors, Iceland has neatly
side-stepped the price war and started to set its own agenda while
building a new identity through PR (Analysis, 19 November).
Godliman says that to survive the supermarket battle beyond the price
war, this type of strong brand differentiation is key, and there is a
real danger for those in the market who do not sharpen up the message
they are sending to the customer - be it on price or on other
’The important thing for supermarkets is differentiation either towards
quality or value. Waitrose isstill sitting pretty, but it is the likes
of Sainsbury’s, Safeway and Somerfield who are stranded in the middle
and will have problems,’ Godliman warns.
Others point out that while it is the UK retailers who have suffered
miserably so far this year there is plenty of scope for Wal-Mart to
suffer at the hands of the same press that has welcomed it as the
messiah, especially in the media-conscious UK. Pundits with this view
include Bob Ortega, formerly of the Wall Street Journal and author of In
Sam We Trust, an expose of Wal-Mart.
Ortega points out that allegations of the use of Third-World sweat shops
(despite a ’Made in America’ campaign), court appearances for brand
piracy, and its love of massive, out-of-town development have all made
the headlines for Wal-Mart in the US.
But whatever strategy the supermarkets try to adopt, it appears they
have at last received a wake-up call from the new breed of demanding UK
consumer. And maybe when they reflect on it they will see the irony in
the fact that it has taken a former nation of shopkeepers to teach the
new generation of grocers what matters most.