Price war on the gym floor – low prices, no-frills everywhere

Price war on the gym floor, Leisure Report August 2007

Excerpt from my recent Leisure Report article.
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So, are you a Waitrose or a Lidl shopper? A few years ago, you would have been one, neither, but certainly not both. How things change. Now, British consumers are running rings round marketers by being a Waitrose shopper on Monday and a Lidl customer on Wednesday. Marketing textbooks tell you this should not be happening. Prospering consumers used to shop at premium quality outlets, while the financially-challenged (‘hard-pressed’ and ‘of moderate means’ to use the geo-demographics parlance) were reluctant guests at their local budget or value store. But not any more. And it is not just groceries where we now display extraordinary promiscuous buying behaviour. Chief Executives now fly easyJet; people mix and match a £500 Hugo Boss suit with a Debenhams shirt and Sales Directors drive to a £26 per night Travelodgein their luxurious Mercedes.

How can this be? What we bought and from where used to represent an accurate indicator of who we were, and where we were going, but this is no longer so. Precision-guided purchasing is the new game in town and if the best price for illy espresso coffee is the local Netto store, then off to Netto we go. If we then pack those Netto items into a recycled Marks & Spencer carrier bag, this sends a message that we are smart and ‘savvy’ buyers, enjoying the power we now wield, as the internet peels away the layers of the once complex and mysterious world of consumer goods pricing.

So what has changed?

‘Cross-shopping’ appeals because consumers are fast realising that discount or low-cost operators are not peddling inferior goods. You can sleep well at a £15 Travelodge, easyJet is not selling seats on obsolete aircraft and Aldi’s German dark chocolate at £0.89 pence is a BBC award-winning bargain. Consumers are increasingly compelled to look at low-cost providers for themselves, often with some dinner-party encouragement from friends, and they start thinking: ‘why do I need to pay more?’ It is now a badge of honour to pay less; it demonstrates wisdom. Simultaneously, low-cost operators are furiously benchmarking their own products against branded lines to ensure that shoppers do not have to trade-off taste for a lower price. It is also not just groceries where they are infiltrating. Pick up a UBS phone from Lidl and make free internet calls for just £13, or a cordless high-power drill for £10 from Netto.

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