Supermarkets prepare their big bazookas - price and media

30 Aug 2016  |  Dominic Mills 
Supermarkets prepare their big bazookas - price and media

As a new price war looms, supermarket advertising is about to get very interesting, writes Dominic Mills

It is Mario Draghi, governor of the European Central Bank, whom we have to thank for introducing the term 'big bazooka' to describe his massive programme of quantitative easing.

Now, I'm sure, we're about to see the same phenomenon occur in the supermarket wars. The big four - all losing share fast to Aldi and Lidl - have no choice but to launch bazooka shells marked 'Price War starts here'.

Of course, we have to see whether Sainsbury's - share down from 17% at the turn of the year to 16.1%, according to the latest Kantar figures - can prime its bazookas in time to join in the mass shelling.

Last week, no doubt prompted by a rising sense of panic, it fired AMV BBDO after 35 years and appointed Wieden and Kennedy - a result that has left the industry stunned.

This is certainly a dramatic reversal of fortune for W&K, axed with undue haste last year by Tesco after some execrable work for the retailer. It's impossible to know where the blame for this lies, but one must assume that, in its pitch to Sainsbury's, W&K was able convincingly to lay the fault at Tesco's feet (which, given that its current BBH work isn't any better, isn't hard to believe).

Still, the Omnicom bosses will no doubt find a smidgen of consolation knowing that there is at least one supermarket account left in the Omnicom Towers building (a building so poor it was described by its former tenant, RBS, as 'sub call-centre quality') in Southwark occupied both by AMV BBDO and TBWA\London.

That is Lidl which, powered by a combination of a formidable business model and some terrific advertising, continues to take market share from Tesco, Asda, Morrisons and, I'm sure, Sainsbury's too.

The latest Kantar figures, for the 12 weeks to August 14th, show Lidl sales growing at 12.2% (ahead even of arch-rival Aldi) - and market share up 0.3 percentage points to an all-time high of 4.5%.

The question now is whether, as the Big Four (Tesco, Sainsbury's, Asda and Morrisons) line up their bazookas, Aldi and Lidl can hold their own.

That a price war is coming, there is no doubt, and it will probably be Asda that sets the pace. In May it reported sales down 5.7%, for the seventh consecutive quarter. The Kantar figures show them down a further 5.5%, and market share has slumped to 15.7%.

Asda has reacted to its stunning slump in sales in time-honoured fashion. Firing its UK chief executive and issuing fighting talk (well, ok, this is Walmart corporate speak) about "shifting balance from protecting profit to protecting market share". This is code for going big on price cuts.

The others will, of course, follow. Tesco (down 0.4%), Sainsbury's (down 0.6%) and Morrisons (down 1.8%) all reported sales declines for the last 12 weeks. They can't afford not to, especially if they are also competing against a ramped-up Asda.

This naturally is good news for consumers, who will benefit from the mother of all price wars. (It may not, incidentally, be good for savers and holders of fixed-rate bonds, since it will drive overall deflation which, in turn, will place further downwards pressure on interest rates.)

But a price war inevitably leads to an advertising war, so the sound of bazookas will cheer media owners, not least the newspapers, for whom supermarket ads are a mainstay, who could all do with a bit of post-Brexit cheer.

According to someone who gave me a sneak peak at the figures, for example, Tesco and Sainsbury's have spent just £15.5m combined on press in the first half of 2016; that compares with about £40m over the whole of 2015 (i.e. well less than half).

As well as the size of the cuts, much depends on how much media budget the supermarkets are prepared to back up their claims with, as well as how they choose to position themselves.

This is where it gets interesting. According to my very rough calculations (based on half year figures for 2016), Aldi and Lidl have a share of voice far in excess of their market share, while the Big Four's are significantly lower.

The best figures I can get show that Aldi has a share of voice of just over 19%, compared to share of market of 6%; Lidl's share of voice is 17%, almost four times its market share.

By contrast, Asda's share of voice is, at 19%, roughly the same as its market share; Sainsbury's share of voice is 14.1%, under market share; and Tesco is the back marker, with share of voice 14.6%, about half its market share.

Bloody hell. You don't need to be an effectiveness econometrician to see the contribution this is making to their land grabs. As effectiveness gurus Peter Field and Les Binet show from their analysis of the IPA Databank, when share of voice exceeds share of market, brands invariably grow.

We can expect the Big Four to ramp up their spend significantly but, since Aldi and Lidl are the biggest spenders in absolute terms, they will have to go some just to get close to equilibrium between share of voice and market share.

In any case, even if they lose ground in share of voice terms, Aldi and Lidl will continue to see residual benefits from the money they have already spent.

And a significant amount of that is more about brand (albeit linked to their price positions) than it is about specific price promotions - the kind of advertising that keeps working longer.

You can see this in the current Lidl work on TV, which while pushing price, also sells provenance and brand.

The core premise attacks typical British attitudes to food - 'you get what you pay for'. In Lidl's case, it's the assumption that if it's cheap it must be of low quality and, in the case of meat, is of dubious origin (no, not horse meat from Ireland, but you know what I'm saying...).

The ad, shot in documentary style, takes a self-proclaimed sceptic (in this case mum of one, Sharna - discovered via social media) to Scots beef farmer John to show her how he raises his cattle.

It's got a big message, but it's surprisingly low-key. There's another version featuring mussels which takes the same line (below). I've never even thought about buying mussels from a supermarket, and I can't imagine Lidl customers would either. But that's irrelevant. The mussels act as a hero product.

You're thinking two things: "Blimey, I wouldn't imagine Lidl would even sell mussels"; and "hmm, they've combined price and quality."

I've heard a rumour too, which I can't substantiate, that the same beef farm also supplies M&S: same rump steaks, but twice the price.

All of which makes me believe that the folks at and Aldi and Lidl aren't just relaxed about the coming battle, they're positively relishing it. As they say in German: "Holen si auf die grossen Bazookas". Look it up.

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Bob Wootton, Principal, Deconstruction on 30 Aug 2016
“Shit. You're right. Advertising is a key tool in a price and market share war. Media deployment is now as critical as ad strategy, message and execution.

In response, they all need the services of Blackwood Seven, but only the first past the post will get them. Here I should declare an interest as their UK advisor and director.

Supermarket CMO's / CFO's / CEO's can reach me here. Chief Procurement Officers with other agendas should probably (if wrongly) stand back.”


14 Feb 2019 

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