I'm Spartacus! or Dalton Goes Large

Now we’re talking – a proper ding-dong of a price war is underway. For us veterans of the late 1990’s price wars, it’s felt like a cold war over the last couple of years, with the real battles being played out by lawyers arguing about the wording of the price match schemes which have been used instead of actual price cuts.

So far this year, we’ve had Price Drop 2 from Tesco which has felt a bit of a damp squib unless you enjoy seeing beautifully decorated and merchandised traditional market stalls in front of gapy actual produce departments. Co-op have weighed in with a well-designed, but poorly executed, campaign under the “Fair & Square” banner.  Asda of course, are always 10% cheaper anyway, which is why I got £10 back off an £80 shop through Asda Price Guarantee recently.

But this week, Morrisons raised the stakes with a wide-ranging selection of cuts across the store. But “I’m Cheaper” is way more and could potentially be a game-changer for the trade, if not for Morrisons.

First of all, there’s the execution. They’ve been working hard towards maximizing impact in stores with the decluttering that has been happening recently. With less clipstrips and the banishing of the dreaded wire bins and manufacturers shippers, any big launch would be given a chance to be seen. And be seen it is – the design is uncharacteristically simple and is consistent across all categories and all forms of POS. But more importantly, it’s landed in one big hit with no signs of it being implemented. I can’t remember the last time I went into a store at 9am of a big launch and saw everything up with none of the store staff walking around with various bits of cardboard and fixings while scratching their heads. Security covers, barkers, wobblers, displays and even hanging boards (and there’s one in virtually every aisle) were all in place. Even Tesco didn’t get this impact when they launched their “Love Every Mouthful” and, although there’s been better execution of “Down and Staying Down”, its scope is limited to the aforementioned market stalls. “I’m Cheaper” touches every single corner of the store. Wow.

But there’s more – can you remember the last time a retailer was so shopper-focused with their message? Usually price cuts are announced with big numbers hoping to communicate the scale. However, to the shopper they sound more like Dr. Evil in the Austin Powers films saying “a beeelion pounds”. Morrisons are talking about the number of products they’ve the cut the price on – “over 1000”. That’s a number shoppers can understand– it’s big, but not so big that they can’t get their head round it.  £100million of price cuts might not seem much when they hear about profits of £1bn plus, but 1000 products seems big, especially as most probably don’t realize that there’s likely to be well over 15,000 products in the average superstore.

So far, so good then. But what this exposes is an underlying weakness with Morrisons in terms of their ability to build a modern dynamic retailer. When they do stuff with scale – a price launch, new channels, store formats, etc – they are market-leading in terms of ideas and execution. But they continually fall down on the small category level projects and even relatively normal work such as range reviews. At this level, from a suppliers perspective at least, there feels like there’s a lack of real leadership and this lets the cultural in-fighting between the pre and post Ken-era people in head office take over. Unfortunately, for all the glamour of the big stuff, it’s selling beans and doing it better than the other grocers that makes the difference. You see evidence of this in the M Local and M Discount formats – great concepts, beautiful shops full of innovative details. But the ranging is terrible – speak to the buying teams and most deny any knowledge of it, and even less interesting in trying to sort it out.

I have a real soft spot for Morrisons – I like their attitude, I like the fact they’re trying new things and they’re certainly the only ones trying other things as well as price to battle the discounter threat. But until they resolve deep-rooted cultural issues internally, they will continue to struggle. Time will tell if this latest initiative works – the “stonking deals” activity in the Christmas run-up did nothing for them, but this is a whole different affair. I wish them luck and also hope to see more great big ideas coming out of Bradford as long as Dalton can hold on.

 

 

Let Them Eat Aldi

All the retailers I deal with at the moment are concerned with these days is how to stop their market share being eaten away by the discounters. And who can blame them - in the 12 weeks to January 5th, Kantar Worldpanel's data showed Aldi and Lidl had gained 1.3%pts of share compared to the same period in 2013. Combined, they're now at 7.1% market share - bigger than Co-op and with considerably less stores.

I must confess that I've become a convert myself - Aldi in particular is a great store which suits my top-up shopping ways. Their fresh food is good quality and, as a self-confessed Germanophile, I revel in the choice of imported cold meats and schnitzels. For top-up shopping, the alternatives are fighting my way round a 50,000 sq ft (or larger) superstore or a cluttered and poorly ranged c-store (independent OR multiple owner), the latter usually coming along with a price hike too. I've also mentioned previously that I rate Aldi's no-nonsense approach to their own-label products - match the brand or stock the brand if you can't - and this further boosts their appeal.

But, once you get past the basics, they aren't perfect. A bit like TK Maxx, you have to go in with a mindset that you might not get exactly what you want, but you will get something and that it will be a bargain. For example, I do a lot of stir-fries at home and Aldi sell incredibly good value straight-to-wok noodles at around 65p - none of the big four comes close to this price, and not all even bother with private label versions. I can also get soy sauce (though not the light one I prefer), good meat and veg but, I always sprinkle Chinese 5 Spices liberally over my creations and Aldi's small, confusingly mixed-case offering of herbs and spices doesn't deliver anything more exotic than chilli powder.

Discounters are full of these examples, and this is one of the problems facing the big traditional supermarkets. Shoppers who have enjoyed unprecedented access to the best ranges of food in Western Europe in some of the best looking and certainly most organised supermarkets in the world over the last decade are "down-sizing". They are happy to go into a small, cheaply-fitted store with a very edited range and checkout service that prioritises speed over niceties. Actually, on the service part, I have NEVER had a problem at the tills in an Aldi - the staff are consistently friendly, efficient and responsive to changes in queues. I certainly have not heard them moaning to each other about the unfairness of where they work, or a manager on the shopflooring wailing about his hours being cut to his team. If they roll-out self-scan, I bet the voice in the machine won't be as smug either.

Aldi and Lidl's share gains are a mix of "savvy shoppers",who are using them for their core basic shopping needs and using indies and superstores for the "nicer" things, and the poorer in society who are coming to depend on them - largely due to a well-thought out location strategy. This will particularly hurt Asda and Morrisons whose core shoppers are a very close demographic and lifestyle match to those flocking to the discounters. Morrisons probably have more about them to stem the tide, particularly as M Local expands and they move online. Asda, however, have already shot the online bolt and are cranking their one lever - price - so hard it's going to come in their hand soon. I'm hearing about more "value" bays and a policy that sounds like "Less is more" coming back to Asda - policies that lost them middle-class customers in the past and just make their stores look like larger and more expensive versions of Aldi. 

Tesco aren't out of the firing line, but they're also battling the High Street discounters. As I've mentioned previously, the High Street lobbyists always conveniently forget the huge investment Tesco have made into High Street sites, mainly through their Metro format but also with some Express stores and also as superstore anchors in town centre developments. Here, Tesco are battling with the likes of Home Bargains, B&M, Poundland, Poundworld, 99p Stores and so on. These guys are hard and fast to compete with. They trade with the industry very hard with all their focus on margin with no handcuffs of keeping shoppers happy through range choice. At best, we have price-marked packs engineered to hit a £1 price point to a set margin, at worst we have short-coded stock and grey-market imports.

Ironically, Tesco and Asda have both run trials in the past that could help them now. In 2005, Tesco setup Metro stores in Sheffield and Edgware as "discount convenience" concepts. This saw a dramatic cut in SKU count and staff and sought to address new insights from deep cover research into very low affluence households. The challenge as always when targeting these shoppers is that the tend to focus on core grocery lines which, due to their high volume status, also tend to have wafer thin margins. The "choice" lines that help create a better margin mix for retailers become far less relevant so you have to look at reducing store operational costs - less products to fill, less staff. 

The following year, with more shouting to the media, Asda launched the first 2 of a 200-strong chain of Essentials stores. These own-label stores were an unmitigated disaster with the Northampton store closing less than 6 months after opening amidst rumoured weekly turnover of less than £7000. The concept was sound in theory, but poor choice of locations and an own label offering nowhere near the strength of "Chosen by You" meant the enterprise was doomed from the start.

So perhaps the answer is already out there for the mults, possibly in the form of a new fascia that sets out a stall of a simpler "edited choice" range and a bigger emphasis on own label products. It would be a bold move, however, and you have to question whether any of the current chief execs would take the risk. Asda have the sites most suitable for this with their former Netto stores and a successful implementation could mean they wouldn't need to hide that group of stores' underperformance behind legacy stores roped into the Supermarket banner. I'm sure Tesco could do well too - stores like Edmonton Green which haven't been refitted or rebadged for over 30 years would certainly benefit from a lick of paint to stop their terminal decline. And what about Morrisons? Well, maybe Preston is a step down that very path.

Whatever the answer, the UK grocery scene looks certain to continue in an entertaining way indefinitely. We are seeing the biggest shift in shopping behaviour since the advent of self-service. These interesting times will show us who the best are at adapting.

Asda - Death of A Mass Market Grocer

In the UK, we just love shops. We like Grocers who give us an experience and give us the chance to feel better about ourselves. Well, we used to - the unprecedented squeeze on household budgets over the last five years has made us seriously consider the idea of discounters and Aldi and Lidl picked the right time to go on a building spree to capitalise.

Asda, a retailer based on one trick only - Price - should have been taking advantage since 2008. A former board member proclaimed at the start of the recession that "This is our time". It's been anything but with a static market share which would be bad enough if they hadn't added over 150 new sites in the same period. Losing share at both ends of the spectrum would make most boards panic, but Andy Clarke has stuck rigidly to the same policy. This week though, in openly declaring a price war against the discounters, he's effectively killed off any ambition for Asda to be a true mass-market retailer.

There was a time, around 2007, when Asda were actually starting to attract ABC1 shoppers, largely through a dramatically improved range of wines and a hugely successful 3 for £10 deal across the category. But these shoppers, a big chunk of the UK grocery market, also demand shopping experiences. They are generally not big fans of soul-less barns - as their desertion of Tesco over the last few years has proven. To be fair, Asda have tried to make their shops nicer - the grey (sorry, "Taupe") walls have gone green and maroon while fridge carcasses have gone black. On non-food and clothing, they've actually led the way by bringing learnings in from their stop-start Living format. But while the new work looks very pleasing in some of the Supermarkets, the superstores and supercentres which deliver the big money remain hideous places to shop. In terms of major multiple refits or new stores of the last year or so - Tesco Bishops Stortford, Sainsbury's Welwyn Garden City and Morrisons St Albans all deliver a great shopper-focused vision of how retailing should-be. At Asda Trafford Park, we ended up with some low MDF cabinets for produce (plus the chilled produce black "maze") and the bakery fixture went from grey to black. No innovation, nothing for the shoppers apart the same tired message of engineered £1 price points.

It must interesting to see what McKinsie's are digging up. I really don't rate them highly myself - they are master in renaming solutions already found within in a business. But, in Asda, they might just work. During the 5 years I spent in the cultish world of Asda House, I worked with some of the brightest and most innovative retailers I have ever had the pleasure of working with. The problem was that inertia and an incredibly political reading of the "culture" at Asda House meant very few of those ideas ever saw the light of day. Often the mantra of "everyday low cost" was heard - certainly more than the question "what do our customers want?"

Well, yes, customers DO want price - and increasing numbers want this above all else. But if you are a retailer who wants to retain the number 2 spot, you can't just chase those customers. For every great piece of work that Asda do that might appeal to more affluent shoppers, for example the Leith tie-up with the ever-improving Extra Special range, going out and shouting out about prices and trying to attract the great unwashed will drive them back to Sainsburys, the expaning Waitrose or the resurgent (store-feel wise, at least) Tesco. For these customers tend to want a great experience - and, yes this is a harsh truth, they won't tolerate a scruffy shop if has scruffy shoppers as well.

Their mainstream competitors are getting it at the moment - all are investing in store environments, extending ranges to create points of difference AND still getting a price message across. You could argue that in times when price is so important to customers, you can assume that they will already find the value - and after about 15 years of "Price Wars" and the various Price Match schemes, they will now make their choice around the other stuff. The small, but growing, percentage who don't care about shops will head to Aldi and Lidl and won't even consider Asda any more. Those who do care, will see the further dumbing down and find somewhere they're more comfortable with.

Tesco Need Kwik-Refit Refitters

It was bound to happen eventually, but Refits seem to be back as the must-have essential for any successful retailer. JS and Morrisons have showcase stores which are refits in the shape of Heaton Park and St Albans, while Asda have been very quietly applying some of the new store designs used in the supermarkets format to freshen up their larger stores. And now, the talk is all about Tesco embarking on their biggest store investment programme since Refresh My Superstore over 10 years ago.

Many in the industry obsess on the latest new stores and fantastic new designs, but the average shopper generally only cares about the handful of stores they use regularly and is often unimpressed by the stuff that us retailing geeks get excited about.

There are numerous stores around the country left to trade alone with prototype kit that was sexy at the time, but became unviable once the value engineers got their hands on the roll out programme. Whilst I love the love level produce kit Morrisons have been playing with, I'm reminded of similar gondola units at the front of JS Central in Tottenham Court Road when it first opened. And how many times have we been told Olive Bars are the future?

In one of their many anti-Tesco rants, a Guardian writer showed her narrow knowledge of their stores by accusing them of popping up with fake clock towers everywhere. Now, that design of store hasn't been built for over 15 years butane so this serves as a great example of how the public perceives the big retailers - through the lens of their local stores.

And this is what Tesco need to be wary of. Morrisons are in a position where they have some fun in a couple of stores before deciding what are the bits to take around the country while Tesco need something that can roll out to 800+ shops quickly, cheaply and with minimal customer impact. Not an easy brief it has to be said.  Carrefour have tried an ambitious project with their "Planet" concept and progress has been halted as they have discovered roll-outs aren't the same as trials. Personally, I'd tie Tesco down to 5 key points.

1. Put Produce back where it belongs
Look at Morrisons and JS - a strong Produce department is still the best way to greet your customers. Hidding it halfway round the store just doesn't work. You don't even need to go as far as Morrisons - good simple signage and kit like JS use will work. In fact, the green kit used by Tesco for well over 10 years is actually very good if laid out and planned well. Let's get back to seeing a big bountiful and colourful display of fresh produce and flowers as we walk in.

2. Give shoppers some room
The thing that stood out for me in recent JS refits as well as landmark stores such as Welwyn Garden City is the width of the aisles. Everyone seems to have been obsessed with maximising yield in store layouts in recent years which has resulted in cramped unpleasant stores. This is often made worse during tough trading times as more shippers and dump bins are added in. With non-food returns per square foot dropping and most grocery halls at optimum space, now is the time to invest in space for the customer.

3. You only need one seasonal aisle
Or to put it another way, before adding a second make sure you've got enough credible customer-focused events to fill the space for 12 months. "£1, £2, £3" and World Food Events may seem like a good idea when projected from Powerpoint, but they don't work in store.


4. More soul in the signage
Tesco signage has got more and more clinical over the last few years. And to make it worse, the modern colour palette seems to be inspired by 1950s hospital wards. They need to look at JS for directional signage and Morrisons for feature signage inspiration. And most importantly, remember that carpet-bombing a store with colours and signs isn't the way to do things. Good stores are simple with pockets of personality.


5. Keep your boxes in the warehouse
Shoppers don't want to see your overstocks nor do they do feel reassured that the item with no stock on the shelf has a case out of reach. It cheapens the feel of the store with the impact being that you feel an impulse to trade down on your item choice. For snobbier shoppers, you may even trade out to a store which makes you feel better about yourself.

These 5 points assume the basics are there as well - sensible space allocations, proper customer-focused flows and great implementation at store level. It's time to get back to basics for Tesco - especially as when they are doing the basics, they have generally done them way better than anyone has done previously. That's the every little that helped them get where they are today

2012 - Bring It On

When I was visiting London last month, I got stopped on the Millenium Bridge by a German TV News crew who asked the question “what are you looking forward to most in 2012?”. My answer was simple – 2013.

There’s no question that 2012 will be tougher than 2011. For all the hype about cuts last year, many only started taking affect halfway through and many more will hit us this year. There’s also a lag in consumers reigning in their spending. I feel the penny may have dropped at last that those credit card bills do actually need more than the minimum payment.

An even higher percentage of “leisure” time will be spent in supermarkets this year and a higher proportion of disposable income will be spent on food and drink. The paradox of this is that those above average household incomes will possibly be spending more on grocery than last year, irrespective of inflation.

So how will the mults react? Tesco and Asda seem obsessed with price, even more than their customers at the moment. You can understand it with Asda as it has long been their only lever and hard-coded into their DNA. But with Tesco, they seem to have forgotten what made them the behemoth they are now. During the 1990’s, they invested in price AND shops – now their shops are increasingly looking tired and unloved. Pictures are flying around twitter of items with the wrong coloured shelf-edge labels and even a complete lack of them – a surefire sign of store cuts biting.

Tesco will also face mixed impacts from their formats – Extras will surely struggle with non-food space returns falling but Metro and Express will both benefit from shoppers switching to top-up shopping and shorter journeys in their cars. Asda also claim to have formats, but the Supermarket format lacks a crucial element that Metro has – good location. Shoppers who prefer smaller stores tend to arrive by foot or public transport – much of the Netto estate was on retail parks and other cheap rent locations and not really set-up for this. I await the next set of Kantar data with interest as Andy Clarke’s assertion that Asda can now “do small stores” looks increasingly similar to George Bush’s declaration of victory in Iraq 8 years ago.

I personally can’t understand Sainsbury’s at the moment. I genuinely felt this time last year that were well placed to take the number 2 food spot away from Asda but it never quite materialised. Certainly the refit and opening programme is creating some stunning looking stores which invest a lot of space to the shopper, there’s still a slight issue convincing the crucial mid-market shoppers that they can get their full shop there. JS have incredibly strict shelf inventory rules which make it harder for them to offer breadth of range compared to their competitors. This will probably hamper their ability retain big trolley shoppers until a solution can be found. There could be an element of slow burn with JS though and I start the year in the same way I did last year, expecting them to get good growth and at the very least make the good folk of Leeds a tad nervous.

No such problem at Waitrose though – they suffer no problem with squeezing in range in their increasingly ambitious looking shops. They’ve also got the “buzz” around them amongst shoppers – a kind of aspiration that used to be reserved for M&S food before it appeared everywhere with Simply Food. They will have some big sales numbers to lap from last year which might point to a slight slow-down in their growth. Online will certainly help, and the early figures from them suggest a cracking Christmas period. There’s a good chunk of Ocado business they will pick-up as the early teething problems become a distant memory while the snobbier amongst us will surely look forward to a nice looking Waitrose van parking up outside the house to wind-up the neighbours.

Morrisons had an amazing year last year and I fully expect that to continue. They seem to have a great balance at the moment, with shoppers seeing them as cheap without such over t marketing as Asda and Tesco. Although a large proportion of their estate still looks dated and reminds me of my old Tesco in the early 1990’s, they’ve shown with their store development programme that they understand what the modern shopper wants from a store. Plus in M Local, they have a unique take on convenience which I think will work well, especially when they get brave and tackle the London shopper antipathy that has surrounded the brand since they took over the Londoner’s beloved Safeways.

Finally onto the Co-operative. They have marketing sewn up, even finding the only accent in the world that can rhyme “Good” with “Food”, and my experiences with them suggest there are a lot of great ideas and projects coming out of HQ. But, and it’s a big but, this just isn’t showing up in their stores yet. Their showpiece city centre new stores are great, but the vast majority of their estate is dated, messy, badly laid out and generally a poor experience. The business needs to be dragged kicking and screaming into the modern age, something that can be done without losing the ethical and community USP. The business needs to be brave and accept 2 or 3 years of pain and poor growth. But I’m confident that if they hold their nerve, there’s a cracking business there.

2012 will be incredibly tough for everyone, but I’ve personally never ducked a challenge. There will be a lot of whinging and bad decisions made over the next 12 months, but good businesses will always survive tough times.

See you on the other side!

So This Is Christmas...

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!

Non food

Asda’s announcement that 4 of its 25 Asda Living stores were potentially closing and Tesco's redundancies in its Non-food trading team makes it a good time to look at the world of Non-food in grocers.

Not too long after Tesco closed it's last few standalone Home & Wear stores, Sir Terry Leahy took Tesco on a journey to a promised land where 50% of their turnover came from non-food. Last year, Andy Bond announced a rare aspirational target of making Asda number one in non-food. But with Tesco hinting in their interim statement that non-food was behind the UK slowdown and Andy Clarke announcing that Asda's Living format expansion was being slowed down (or halted as some cynics would say), has the non-food dream ended?

It's probably worth starting with a look at why food retailers got into this in the first replace.

Leahy's vision when opening the first Extra hypermarket at Pitsea in 1997, was to create one-stop destination shops. To do this, non-food was key. It's incredible to think now when you at Tesco's incredible electrical departments that only 14 years ago, it was a ramshackle collection of grey market tellies being sold off white grocery shelves. Clothing was limited to last season brands off the grey market and the shortlived "T for Tesco" label. Now Tesco are a top 5 clothing retailer thanks to the Florence & Fred range.

Of course, maximising the proportion of consumers disposable income spent in your stores has its benefits as does changing your margin mix. The ability to add in higher value products which deliver relatively huge margins has help Tesco and Asda effectively cross-subsidise lower prices on core grocery lines and provided fuel for the price wars of the last 10 years.

When the credit crunch hit in 2008, Tesco and Asda must have started rubbing their hands. Rick Bendell boldly claimed that Asda would “rebuild Britain” through Darren Blackhurst’s obsessive volume drive on basic non-food items. The theory was that selling Dinner Sets at £3 would drive huge volumes and that these volumes would bring better factory prices. It also assumed that the disposable age, where shoppers would think nothing of replacing homewares and electricals on increasingly frequent cycles, would go on forever.

The resulting recession and lack of return to strong growth in the economy has instead made them retreat to old habits. Rather than spend £250 on a PL television which won’t have the latest spec and may not last much past its warranty, we’d now rather put our trust in a Sony or Samsung and spend £350. And even then, we won’t be doing that on a whim anymore. In times of trouble, brands are seen as a safe harbour and homewares are seen as in investment of sorts.

The other big dark cloud is the exchange rate; non-food deals are generally done in $US and getting your forecasts on the rate wrong can have disastrous circumstances, losing you money before the stock has even been pulled off the boat. Add in volatile cotton prices and potential inflation in China and it no longer looks such an easy buck.

The earliest non-food plays were Home Entertainments and Books of course. The grocers have done much to lower prices on these products, arguably contributing to the demise of High Street specialists, but will now themselves be suffering from the march of digital. Even selling the hot DVD launches at a big loss to drive footfall isn't as effective as it used to be. And what happened to CDs, then DVDs, now looks to be happening on Books with the expansion of Kindles and their kind. Games is the last island of hope but that won't last forever - enjoy those midnight queues for the latest Call of Duty release while you can.

The reality now facing Tesco and Asda in particular now is that they have a large proportion of space dedicated to products their shoppers no longer want and often on mezzanines which are notoriously hard to get shoppers up to to. People looking for non-food bargains are happy to put their trust in the ever-improving Wilkinsons stores, leaving the grocers high and dry.

All can not be total doom and gloom though - clothing is still strong, although in Primark you have a tough market leader for budget fashion. In George and F&F, there are some brands while JS is starting to gain momentum with Tu, helped by some injection of credibility from Gok Wan. Morrisons have chosen to go with Peacocks which makes sense, even as an interim stop-gap to free up the space and establish their larger stores as a one-stop shop alternative.

Click-&-Collect may also prove to be a saviour. Tesco's catalogue operation looks slick and must be hurting Argos while it's only a matter of time before Asda actually manage to get their act together with their Direct website.

I believe there is a future for Leahy's vision in terms of getting all you need under one roof - petrol prices alone suggest it makes more sense than ever - but it will look very different. 50:50 space splits in 100,000 square foot stores will surely come to an end - and hopefully customers might start to get some space to breath in cramped mezzanines. After all, who wants to chose stuff for their home in a 5ft wide aisle with a load of people with trollies around them?

Every £500m helps

Every £500m Helps…

Hey, you remember that guy at Tesco? No not Phil Clarke, the other one? Richard Brasher. Well, the so-far virtually anonymous new Chief Exec of the UK business finally surfaced this week to flag up £500m of price cuts. As a veteran of the price wars that broke out in the late 1990’s, I’m getting a strange sense of déjà vu – not least because a talented Marketing Director by the name of Richard Brasher was leading the charge for Tesco.

The impacts of “We’ve Cut Out Prices” and “We’ve Cut Our Prices…Again” (originally briefed as “F*** me, We’re Cheap”!) were big at the time and the new £ and Scissors logo became iconic. Coupled with investment in stores, both new sites and bringing older stores into the 20th century through the Refresh My Superstore and Metro programmes, Tesco were able to ensure WalMart’s entry to the UK market was not as dramatic as they hoped, put further daylight between them and JS and ultimately lead to the deathknell for Kwik Save. They showed that you didn’t need to compromise your shopping experience to get great value and the shoppers bought it in their droves.

So can returning to basic price cuts really help Tesco out of its rut?

Kantar data is suggesting the two businesses who continue to invest in store experience with only subtle price communications are winning. As household disposable income becomes squeezed, a higher proportion of it will be spent on food. This means grocers will be need to provide the “hit” of leisure shopping that moved to non-food operators on Retail Parks and big malls when times were good. A voxpop from piece of research carried out at Tesco when I was involved on the price campaigns has always stuck with me – “I don’t like all these signs telling me how cheap you are – I know that. If I wanted signs reminding me how tight my budget is, I’d be shopping at Kwik Save”.

I’m sure that’s even truer now that it was 13 years ago. As a nation, we got hooked on easy credit and leisure shopping. We still want that drug – Westfield Stratford clearly showed that – but we’ll need to get it when we buy the food we depend on. Step forward Waitrose and Morrisons – they want you to come into their shops and feel good about it.

Nothing new from Waitrose – their shops have always been a bit special, although the hand-painted wallpaper in the Leeds store café is perhaps a tad excessive. Now they are more accessible with more stores and a really strong private label in the form of Waitrose Essentials, they are gaining share of just the kind of people who want to feel good about themselves.

Morrisons are coming from a different perspective as frankly the majority of their stores are horrible overcrowded places which remind me of the store standards that we in place when I was a spotty youth over 20 years ago. M Local and Kirkstall have changed that – they are creating retail experiences that we’ve not seem in the UK before,  or at least not since Tesco refitted Pitsea as an Extra and put in dancing penguins on top of the freezers.

What both Morrisons and Waitrose are doing is putting product at the heart of their store concepts. If you go back to our shopping mentality when budgets are tight, we’ll look more to food to treat ourselves with, paying a pound or so more for something a bit special to go with our Smart Price Orange Juice and Pasta.

Bringing this all back to Tesco, experience suggests that we won’t know if this has worked for a while, and probably after more cuts from Tesco and their competitors are announced. Asda’s PR team (my biggest fans!) went on a grapeshot offensive on Twitter in the wake of Tesco’s announcement, but we’ll have to wait and see if Asda have got any real news for their PR team to fire out. It took JS to bring a bit of decorum to proceedings by pointing out that stopping double Clubcard points will save Tesco £350m.

The last couple of years have proven that none of us really know what will happen in retail, so for us retail geeks all we can do is grab a nice glass of wine, sit back and watch the carnage unfold during the Golden Quarter.