Supermarkets- In-store strategies to woo customers.

Since 1995, the strategies used by major chains to increase custom have varied from intense price competition to loyalty schemes, as well as constant in-store innovation on products.

Wal-Mart's entry into the UK through its acquisition of ASDA dictated new strategies. The Wal-Mart formula is based on low prices, ‘retailtainment' and selling non-food products.

Wal-Mart's profits are five times higher in non-food sales than food sales. Retail analysts Verdict say that a massive £14.5bn was spent on non-food items in supermarkets in 2000 and that it is a potential growth area, especially for ASDA and TESCO.

Parallel or ‘grey' imports are another growth area, with supermarkets importing designer goods direct from factories outside the EU- rather than through authorised wholesalers- thus undercutting authorised retailers. In a recent court case Levi Strauss successfully prevented Tesco selling Levi jeans at cut price.

The increase in the number of people ‘eating out' is a challenge to the supermarkets. They have responded by increasing prepared foods, especially luxury own-brand ready meals. Some supermarkets are developing in-store juice and sushi bars. Sainsbury now has Starbucks coffee outlets in some stores.

The effect on specialist retailers and restaurants will be dramatic, as the supermarkets will be able to out-price them. Pharmacies, dry cleaners and post offices are beginning to appear in superstores, further shrinking the role of high streets. Supermarkets have also entered service areas such as insurance, banking, internet service provision and soon even divorce finalising and will-writing.

An increasing amount of processed organic food and fair-trade products are finding their way onto the shelves. These products give the impression of a caring, sharing company and are major growth areas. Supermarkets see them as an expensive niche market and evidence shows that they have exploited customer goodwill by overcharging for fair-trade products.

Organic enthusiasts question whether the corporate appropriation of the organic sector, including importing cheaper products and bankrupting small-scale UK farmers, is true to the original social and environmental aims of the movement.

In September 2001, tesco.com announced it was on the verge of profitability. At the start of 2004, Tesco became the biggest online grocer world wide, with sales of £500m worldwide. Many shoppers, however, are still unconvinced by internet shopping.

To challenge home shopping, retailers are improving ‘in-store' experience, promoting shopping as an enjoyable leisure experience. From Asda's in-store chaplains and MP's surgeries to nail polishing and pizza spinning, ‘retailtainment' is fast becoming part of the supermarket shopping experience.

During summer 2001, Asda hired trained actors to work as store greeters, in a bizarre full circle which has seen shopping move away from the genuinely personal service of many small stores, through the impersonal experience of superstores, and back to a cheesy fake version of personal service again. This time, however, the experience is carefully orchestrated by ‘customer relationship management' to make customers feel more than the sum of their intimate shopping records, collected from loyalty cards.

In November 2001, Sainsbury's released a story about lovers found kissing besides a chiller cabinet. In other supermarkets, there are reputed to be ‘singles nights'. As Marketing Online reveals, this is a concerted PR strategy to make supermarkets sexy and combat the alienation that shoppers feel among the strip lights and endless aisles, overwhelmed by strangers and shelves stacked high with products.

Whats Wrong With Supermarkets from Corporate Watch

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