Any way you look at it, it’s going to be an eventful final 6 weeks to Christmas for our grocers. A tough year could get worse or turnaround completely. At the very least, the big 4 will be looking to emerge unscathed from the battle, with no embarrassing piles of stock left to clear at reduced prices to the scavengers in January.
Tesco probably have the most to lose. The Big Price Drop has probably come under more scrutiny than any of the myriad of “We’ve made £x million cuts” claims from the grocers over the last 10 years, but can sometimes be easily dazzled. Their success may come from leveraging their non-food position – Double Up Vouchers are heavily focused on non-food this month and the queues at Direct collection desks suggest that things may be picking up on that front. My worry for Tesco is that will their stores be able to cope with the peak – recent visits suggest that even in this calm before the storm period, their replenishment and service levels are at an all-time low. My Twitter followers were treated to a live stream of updates when I recently tried to collect my Direct delivery – one person manning the desk during an evening peak, with stock piled up around her, products not booked in properly and apparently one depot running over 24 hours behind. Even if they get the money this year, poor fulfilment may make people think again about returning.
Asda traditionally struggle during Q4 as people tend to “trade up”, i.e. shop at nice feeling stores. With the effort put into Supermarkets this year, they may see this exaggerated as even those shoppers who remain loyal to a brand tend to ditch their smaller local stores for the hypermarket versions. Although the headline figure of 45% growth after conversions from Netto is good, it’s not a good return on the investment in store look and feel and increase in SKUs. Furthermore, even if they are not deserted, could the tightly-pack fixtures cope with extra demand? Asda do have an ace up their sleeve though in George clothing, which always does a great job with the party season and the now legendary Tuxedo’s. If George have a winning collection, that might be enough to drive in the footfall that Asda needs to make a poor year slightly better. The latest Kantar results suggest they got their usual Halloween boost so perhaps there is life in the old dog yet.
Sainsbury’s are all set up to do “ok” as they have done all year. You get the feeling that there’s a lot of pent-up growth with Sainsbury’s and I stand by my assertion that they will knock Asda off the number 2 position soon – just not in 2011 as I originally suggested. Without the Jamie effect, they will need to get food credentials from other sources, although the Taste The Difference brand has enough weight to see them through. Their new superstar, Gok Wan, may come good for them too as his populist glamour has the potential to take some of the George party clothes shoppers away from Asda. Brand Match's instant appeal should ensure they retain some price credibility to add to their usual picking off of competitors' customers treating themselves to a trip to JS to trade-up.
Morrisons have been the retailer to watch during 2011 and I’d expect this to continue. Although they’ve kept price in their communication, it’s been a lot more subtle than their peers and instead they’ve really ramped up their message on provenance. This will, I believe, prove to be a winning strategy this Christmas and they could find themselves stealing business from the likes of M&S if they get their quality credentials across. The recent relaunch of ready meals under the M Kitchen banner has been a resounding success and clearly demonstrates that product is king again. This Christmas could be their time and a just reward for their hard work during the year. There's a lot of chatter about Morrisons who are gaining their new reputation through word of mouth. Whether or not that converts to an even bigger step-on in sales remains to be seen, but I believe they are best placed of the big four this Christmas.
So that's my opinion - why not vote for your favourite to win this Christmas using the poll to the right!