Overview

The grocery market is both complex and extremely competitive. Supermarkets fight on price for customers with a range of different pricing strategies, pricing mechanics, loyalty schemes and communication. But with so much going on, what does good value look like to a consumer? How do all these potential reference points translate into the experience a shopper has?

Our client wanted a consumer perspective to help shape its strategic review. They recognised that how they ‘saw’ their own and their competitors’ stores reflected their professional interest and wasn’t necessarily representative of what shoppers experienced.

They needed to understand how effective their key competitors’ approaches to signalling value were and what else about the shopping experience could be shaping value perceptions. In short, how much of a threat was the competition?

Our Approach

To understand the customer experience, we conducted store walks and shopper observation across eight stores, covering key competitors and different formats.

Shift’s consumer behaviour model is a powerful reference point for the factors that we know influence and drive behaviour at an unconscious level, so our experts have a consistent framework to evaluate any customer experience.

Additionally, thousands of hours spent psychoanalysing supermarket shoppers’ behaviour gives us an unparalleled perspective on how people process complex retail environments and what their behaviour reveals about how they’re thinking.

Output

We identified that our client’s competitors were doing several price-related activities that either degraded the shopping experience for customers or inadvertently promoted the value credentials of competitors.

In the case of one key competitor, reducing the potential loss aversion of price with heavy promotional messaging made shopping considerably more effortful; they were ‘giving’ on price but taking away on ‘experience’. Another competitor was vociferously telling shoppers explicitly that they were price matching a named competitor, but in the process delivering a very different implicit message about their value proposition across the store.

Differences that we observed in price messages in our clients’ different formats led to us identifying a natural experiment that could help provide behavioural data to inform their strategy. We also flagged how quality was being communicated by all the brands, which is potentially just as important as price to consumers considering ‘value’.

The result? Our client has grown its market share, with market observers attributing its success to their effective price and quality strategies.