Grocery Stores Rely On Innovation—Not Price—To Win Customers

Grocery store development is down in central London as many shops cash in on the valuable land that is sought after for housing. While the Big Four have been paring down their expansion plans, they’ve also been focusing on adapting existing stores to better serve the remaining customers and to compete against the discounters—and they’re succeeding. We talked with JLL head of UK retail Tim Vallance about what’s next for London's grocery stores.

The UK grocery market has shown signs of improvement with a 1.1% year-on-year rise in sales, Tim tells us. Tesco, Morrisons and Asda all slowed their pace of decline while sales rose at Sainsbury’s, Waitrose and Co-Op. Discounters Aldi and Lidl rose 14.4% and 17.7%, respectively. And consumers are benefiting, Tim says; the long-running price war between the traditional Big 4 grocers and discounters such as Lidl and Aldi has resulted in UK shoppers being 8.5% better off on each weekly shop than they were in December 2014.

Innovation is continuing to draw customers into stores. Morrisons’ new self-scan checkouts helped growth, and its exclusive deal with Amazon whet its appetite for on-demand growth. The company recently revised its home delivery agreement with Ocada while Amazon moved on to AmazonFresh.

Amazon plans to extend its food delivery service to other big cities in the UK, though no time frame has been given for the expansion. 

Online and convenience remain a focus for Sainsbury’s, which added 69 convenience stores over the year, Tim says. Sainsbury’s has pledged to double the number of its stores offering Click & Collect, and is also piloting a one-hour bike-delivery service in London. 

Earlier this week, Waitrose became the first major supermarket to operate a cashless store after opening in Sky’s new flagship head office building at its campus in Osterley. It is the first Waitrose to open on a workplace campus in almost 20 years, and at 1,400 SF is the second smallest store in the retailer’s estate.

Customers are only able to pay by card or through their mobile devices at one of the five self-service checkouts in the store. The retailer met with groups of Sky employees to determine what they would like to see in their new store and determined that evening meals and food to go were huge sellers. Celebration cakes and freshly cut flowers rated highly too.