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Will CX become the key differentiator for UK supermarkets?

Kantar Retail recently released their regular analysis of the UK supermarket sector, the latest research focused on Q1 2016. In terms of market share the big three are Tesco, Asda, and Sainsbury’s, but with the overall market growing 1.1% since last year the more interesting numbers are the market share trends.


Will CX become the key differentiator for UK supermarkets?

The story over the past few years in UK supermarkets has been about the enormous growth of the discounters, especially Aldi and Lidl. Their limited range and strong focus on own-brand products struck fear into the traditional supermarkets and led to predictions of how they might sweep a big change throughout the industry.

Aldi and Lidl are both still growing strongly in the UK, 14.4% and 17.7% respectively last year, but I think it is interesting to observe that the decline of the big players has almost entirely stopped. Sainsbury’s grew 1.2% and the Tesco decline has slowed to just -0.2%.

On the BBC News recently, Fraser McKevitt from Kantar Retail said that he believes this is a significant change in the market because very few customers will use discount retailers for all of their shopping all of the time and the big traditional brands maintain a strong ‘big box’ pull factor.

The conclusion that I draw from the Kantar Retail analysis and the way the market trends are changing is that the customer experience in supermarkets is about to be seen as far more important than just the discounts available. Customers have already expressed a strong preference online for brands that offer a better service, but I fully expect this to now become more of a factor in-store too.

Sainsbury’s recently confirmed their purchase of the Home Retail Group, which includes Argos, a brand that has been extremely innovative in developing an omnichannel retail offer in the UK market. It’s my view that the application of this improved omnichannel customer experience to the big supermarket brands will allow them to start chipping away once again at the market share of the discounters.

The discount chains have yet to reach 10% of the overall supermarket business in the UK. If the big brands can now focus on developing the experience they offer to customers then it’s likely that the discount offer may well plateau as they start recovering.

What do you think about these developments in the UK supermarket sector and do you think that the customer experience can play a major role in changing loyalty to different brands? Leave a comment here or get in touch via my LinkedIn…

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