Was Tesco and Sainsbury’s decline predictable?

Lidl and Aldi have stolen a dramatic share of the UK supermarket business over the past few years and this month announced they now had 10% share between them. But should Tesco and Sainsbury’s have seen this coming? I think so.

And the most important lesson can be summarised thus: just because customers shop with you today doesn’t mean to say they are happy about it.

Over the decades there have been a plethora of studies about how people actually feel about supermarkets. Large proportions claimed to be unhappy about various aspects of their operations and mistrustful of their communications. For instance in the Guardian/ICM poll of 2006, 83% agreed that supermarkets make shopping simpler and cheaper but despite that, many had major concerns:

• 70% thought big stores harm small food producers
• 80% of pensioners feared their power.
• 74% were sceptical about healthy or low calorie food labelling. Only 31% trusted their labelling
• 78% of women said junk food ads aimed at children should be regulated
• 72% worry about food quality

What’s important here is that supermarkets are part of a wider circle of long-term social concerns that really matter to people.  And it is this wider context that ultimately drove their  loyalty. So whilst they seemed like they were happy, they didn’t feel good about it.

When Lidl and Aldi appeared in the market with their crucial price advantage, customers did not immediately leave in droves – the incentive to change was still not strong enough for many people. But the 2008 financial crisis put paid to all that and then the flood gates opened as customers acted on their true feelings. Yesterday it was announced that Lidl and Aldi now had 10.7% of the UK grocery market whilst Tesco and Sainsbury’s prospects have been severely dented in then process.

The cautionary tale is this: do not take your customers for granted, stay in proper touch with how they really feel, understand your own responsibility for this and don’t let success today blind you to the reality that keeping customers for long in a competitive world is very hard.

Francis Wyburd is Guide @whereyoustand, the “hidden voice of the customer” insight business

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