There's been a load of change in recent years among UK grocers. What used to work well doesn't seem to work any longer. Supermarket chains that were once the envy of the industry are on their knees, as consumers change how they approach food.
Here is our look at four trends showing their longevity in British supermarkets, and lessons American grocery retailers can learn from them.
The rise of German-style, low-cost providers
Times are tough for the "big four" supermarket chains in the UK, comprised of Tesco, Asda, Sainsbury's, and Morrisons. Tesco, England's biggest chain and the second-largest retailer on earth (trailing only Walmart), saw its sales fall 3.7% in the first quarter this year.
In response, Tesco announced it was cutting prices to win back market share. But both the Asda and Morrisons chains have promised to do the same. Among the big four, only Sainsbury's has held steady on prices -- despite reporting the slowest profit growth in a decade.
So what's at the root the problem?
Aldi and Lidl -- two low-cost chains that have won consumers' hearts amid the long-running economic slowdown in England.
Neither Aldi nor Lidl are British chains, both have their roots in Germany. And both have a similar, no-frills approach, in which goods are kept in their cartons rather than placed on shelves for customers to grab. That keeps staffing levels low, which helps keep prices down.
Lidl isn't coming to America until 2018. But Aldi is here. And it plans to grow like crazy by adding 650 stores across the nation.
The failure of the Tesco model here
It remains to be seen how the German-style stores will fare in the U.S., although Aldi's estranged brother, Trader Joe's, is doing quite well. But there's no doubt now that the traditional British model doesn't translate well overseas.
Tesco spent a fortune to export its brand to the United States, Japan, and China. It didn't work.
Tesco pulled out of Japan in 2012, sold its stake in its Chinese operations in 2013, and then dumped its stores in America, which Tesco had dubbed Fresh & Easy.
It's hard to say exactly what went wrong with Fresh & Easy, but there are a number of things about its failure that should trouble U.S. grocery chains. Core parts of Tesco's strategy in the U.S. involved opening stores in "food deserts," i.e., places where it's difficult to obtain fresh food at a reasonable price. It also included emphasizing ready-to-heat meals and pre-made sandwiches, relying on self-checkout technology, and using smaller-footprint stores (roughly 10,000 square feet).
Ominously, every one of those tactics is being tested at retailers across the United States.
The power of the high-end
Spend enough time looking at the American grocery scene and it becomes clear that there's not much of a middle market. There are discount stores and there are high-end stores. There are places you can get a microwave meal along with a pack of smokes and some lottery tickets, and there are places you can get artisanal mayonnaise.
In America, this is called the red state, blue state phenomenon in food. And England has its own version.
On the low-end, there are the German discounters mentioned above. On the high end there is Waitrose.
The employee-owned, tastefully decorated markets in England stock the organic brand created by Prince Charles and operate their own farm. Waitrose is, simply, a lovely place full of lovely food. It's like Whole Foods, but with the added cache of having ties to royalty.
That's a recipe for success. While the big four suffer, Waitrose continues to do quite well.
As a result Waitrose, like Whole Foods, attracts considerable envy among rivals. And here in the U.S. there's a growing call for grocery chains to abandon the middle. The message appears to be, either you can be Aldi or you can be Waitrose. Anything else is a recipe for trouble.
Paper or Paper?
The Queen is not amused by plastic bags. And she would like them to go away.
Earlier this month she announced in her Queen Speech at the State Opening of Parliament that the government would begin collecting a 5 pence fee for every plastic bag given away by a grocery store.
Certainly here in America, getting rid of plastic bags won't be quite as easy as getting the Queen to issue a royal edict. Still, the writing on the wall is clear. Plastic is on its way out in the major U.S. markets, and that may eventually prompt the entire industry to back away.
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