The End of an Era - The Big Four No More
The era of 'The Big Four' is well and truly over. There is now greater diversity and the rise of the discount retailer as a result of the recession has eaten into the markets of the Big Four and prompted food price wars across the sector. There are now two clear distinctions where success lies - upmarket or discount and the middle ground is left floundering to define itself in the new landscape. We see this in the rise of Waitrose, Lidl and Aldi now accounting for 11.5% of the grocery market, and their expansion plans show they are expecting further success with their business models.
Tesco and Morrisons have been hardest hit with Sainbury’s and Asda holding their own. The supermarket wars are seeing similar prices across the retailers so there has been a push on raising taste standards and own brand ranges that reflect both quality and economy.
Shopping habits have changed and retailers are moving away from the large format stores, investing in convenience stores and in online services such as click and collect and home delivery. Morrisons has been slow to move into this area but is now investing in similar services and opening more c-stores.
The Co-op made the decision earlier this year to close 200 of its larger stores and focus on convenience, planning to open 150 smaller format stores this year, with about a third of its existing estate being revamped. Ex Somerfield stores will likely be sold off to Aldi as part of their expansion plans.
It’s been a big change for the food retailers but ultimately offers better quality and cost reductions for the consumer. We have seen a rise in promotional items and price war POS being installed in retailers as they jockey to maintain their market shares and attract and keep customers.