With recent news that low cost supermarkets Aldi and Lidl are enjoying huge growth of more than 25%, the monopoly of the big four (Tesco, Sainsburys, Morrisons and Asda) looks set to break for the first time.
While the big four have recently been accused of engaging in one-upmanship, with Asda claiming that some have resorted to ‘basket bingo’ in a bid to increase their customer base, budget supermarkets have been quietly gaining momentum with their straightforward proposition and focus on providing a good customer shopping experience.
In light of this, what are Aldi and Lidl doing right and what can other brands to inspire long-term loyalty in customers?
As the recession bites, some brands are relying heavily on sales promotions or money-off deals to attract new customers.
However, while discounts and money-off deals may work in the short-term, consumers are essentially looking for a brand that reflects good value and provides them with a meaningful shopping experience.
Some brands are struggling as they become fixated on profit and promotions, rather than focusing on delivering consistent communications to encourage loyalty from customers.
Loyalty comes when customers feel a connection with a brand, but even more importantly with brands that understand what they need, and deliver it.
It is the cornerstone of brand success and data plays a crucial role in this. It is by gathering and analysing customer information that brands can gain insight into consumer behaviour.
Where Lidl and Aldi are succeeding is in their commitment to providing a consistent positive experience for customers across all channels.
Whether it’s online or in-store, communications with customers are clear and carefully targeted at the correct demographic.
The most successful brands are those that use data-driven insight to inform their campaigns and communications.
The reason why budget supermarkets have seen their profits rise recently does not only lie in their low-cost products, but in their understanding of their customers.
By correctly identifying their customer base with a targeted data-led profile and underpinning it with a straightforward proposition (ie, low cost products) and relevant communications, they have been able to successfully target customers and boost their sales.
Segmentation is a tried and tested method from marketers, and it is through this that brands can use insight to build up a profile of different types of customers and develop targeted and relevant communications which reflect their needs and interests.
Brands also need to ensure they build on this by having a consistent presence across multiple touch points to communicate well with customers.
By taking a multichannel approach, brands are giving consumers maximum opportunity to interact with them.
It also allows brands the opportunity to collect consumer information which gives them a deeper understanding of their behaviour.
Other brands can learn a lot from this. Data is the key driver of any effective marketing strategy, and brands must now look at how they can harness this to create the most relevant communications.
Consumers are loyal to brands that they feel meet their needs, so if brand messages are consistent across multiple channels, they have a greater opportunity of reaching the customer with the right message at the right time.
Brands that can do this successfully are likely to be rewarded in both loyalty and sales.