By Koen de Jong, Managing Partner, International Private Label Consult (IPLC)
Early January, I went to the UK to visit the stores of a few major retailers to gather some last bits of material for my next book: Managing Private Labels. After an exhausting day in the stores I posted one of my most striking observations of that day on the LinkedIn discussion group, Private Label News. The question I posted was: ‘Is Tesco offering too much choice to its shoppers?’
A comparison between Aldi and Tesco during my visits revealed an astonishing difference in shopper choice between the two retailers. In most cases Aldi as a limited assortment discounter, only offers one own label equivalent alternative to the market leading brand in the category. Tesco however, offers a plethora of alternatives under the Tesco brand. A few examples: next to Nutella’s hazelnut spread Tesco offers 13 chocolate-based own label spreads. It has up to 11 own label alternatives to Fairy washing up liquid and 6 own label alternatives to Sun-Pat peanut butter. ‘Is this getting too much, or is offering a wide assortment next to a different experience the battleground where Tesco (and other mainstream retailers) should continue to make the difference?’ I wondered on LinkedIn.
The question was answered by the new Tesco CEO Dave Lewis himself as he announced only 2 days after my post to axe 20,000 SKUs, more than 20% of the 90,000 SKUs Tesco stocks.
Low cost retailers such as Aldi and Lidl have eaten away significant market share of the big-4 (Tesco, Asda, Sainsbury’s and Morrisons) in the UK. Simplicity is the key-word for these retailers and this is also reflected in their assortment. It is not without reason they are called limited-assortment discounters.
There is a phenomenon called ‘shopper stress’ which indicates the confusion for consumers that results from too much choice offered during their shopping trip. This will not happen that easy in Aldi or Lidl. According to The Guardian, Tesco stocks 224 SKU’s air freshener (Aldi 12, all own brand), 98 SKUs rice (Aldi 6 options, all own label), 283 SKUs coffee (Aldi 20, of which 15 own brand), to name a few.
Hard discounters are in the business of selling at low cost and maximizing rotation. From my profession as a private label consultant I am a great admirer of Tesco. Over the past few decades phenomenal initiatives to drive private label innovation were taken by this retailer. Whether being the good-better-best architecture, organic, fairtrade, free-from or venture brands, it all sprouted from their head-office in Cheshunt. I can only hope they will quickly get back on their feet and will continue to surprise their shoppers and competitors with what they have been so good at in the past.
Koen de Jong is founding director of international Private label Consult, a boutique consulting firm specialized in strategic consult and project manage-ment support to manufacturers and retailers. With offices in France, the netherlands, germany and spain iPlC helps its clients with a pragmatic and action oriented approach. [email protected]
Photos copyright IPLC
