Revolutionary Measures

Asbury’s or Sainsda? Will the Sainsburys/Asda merger work?

The proposed merger between Sainsbury’s and Asda promises to shake up the grocery market in multiple ways. It will create a new leader in terms of market share and, the companies hope, give them the scale to tackle the rise of discounters such as Aldi and Lidl.

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Looking at it through a marketing lens, there are three things that stand out:

1          Slick PR (to start with)
This is a deal that has been discussed for several years apparently, and it shows in the careful messaging behind the announcement. Sainsbury’s CEO Mike Coupe has pledged that there will be no job cuts or store closures and that the combined entity will lower prices by 10%. Clearly this is disingenuous on a number of levels – the Competitions and Markets Authority is likely to force some stores to be sold, naturally reducing staff numbers, while any savings for consumers are likely to come from squeezing the combined supply chain of the new company. This will impact the profitability and potentially staff numbers at suppliers, who employ more people than Sainsbury’s/Asda itself. So there are likely to be job losses – just not at the company itself.

The main fly in the PR ointment has been a classic bit of spokesperson inattention. While waiting for a broadcast interview Mike Coupe was captured on camera singing “We’re in the Money”, from the musical 42nd Street. The overall impression (apart from that he should stick to the day job), was that the whole deal was about enriching management and shareholders, at the expense of customers and suppliers. Cue a hasty apology, but it has highlighted how there’s no such thing as off the record (or camera).

2          A complex brand balancing act
One of the attractions of the deal is that there isn’t that much crossover between the demographics of Sainsbury’s and Asda shoppers. That should mean that you won’t lose any customers, and if you can trim supplier costs you can generate large efficiencies. This is something highlighted by Sainsbury’s, which commissioned research that showed Asda customers value “fair prices” most and Sainsbury’s are attracted by “great fresh food.”

That’s all very well in theory, but achieving sufficient synergies while keeping things separate enough in practice could be more difficult. While other organisations (banking groups, airlines and consumer goods holding companies) manage multiple brands, somehow a supermarket feels different. People have a strong relationship with their supermarket of choice, probably because of the basic importance of food to their lives, so anything that is seen as weakening brand values is likely to upset consumers.

3          The competition won’t stand still
While Sainsbury’s wants the merger to happen quickly, something this large will need regulatory approval and will take time. And while both Sainsbury’s and Asda will no doubt stress that it is business as usual in the meantime, it will take up a lot of management time. Rival grocers will no doubt aim to take advantage of this, particularly as they know about the two marketing pillars (fair prices and fresh food) that the two brands will embrace going forward. Companies such as Lidl, Aldi and Tesco are already aiming to push both messages, now they’ve seen the potential Sainsbury’s strategy they’ll be redoubling their efforts to attract customers away from the merged organisation.

Due to its sheer scale in years to come the Sainsbury’s/Asda merger is likely to make it into marketing and business textbooks. The big question is whether it will be lauded as a well-executed and well-branded master stroke or listed with flops such as Bunnings takeover of Homebase? Initial marketing has been positive and pretty assured, but there’s a long way to go yet.

 

May 2, 2018 Posted by | Marketing, PR | , , , , , , , , , , , | Leave a comment

Short changing the customer?

NFCThere’s been talk about using mobile phones to pay for stuff for a long time, but until now it has been pretty much confined to Japan.

But now the technology seems to be very much coming of age. Last week Orange and Barclaycard announced the UK’s first Near Field Communication (NFC) service, where consumers simply swipe their phone over a reader to pay for low value items. And now Google is poised to announce its own NFC platform, while Apple is reportedly planning to include NFC in the iPhone 5.

The idea is a strong one – why carry around a pocketful of jangling change when you can just wave your phone and buy things? However I think adoption will be slower than predicted – while analysts Forrester predict that 40-50 million NFC equipped phones will be sold in 2011, how many will actually be used in practice? For me, coverage has to be total – if you still need to use cash in your local newsagent you’re not going to leave your wallet at home.

And moving beyond early adopters the biggest fear is going to be privacy – the data you give up on your buying habits will be invaluable to retailers (and the likes of Google). For many people these fears will outweigh the ease of use that NFC brings – remember the protests that greeted the attempted introduction of RFID chips by Tesco and Gillette?

Time for the retail and telecoms industries to be proactive, put in place a code of conduct and head off consumers’ privacy fears before they reach the front page of the Daily Mail……..

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May 25, 2011 Posted by | Uncategorized | , , , , , , , | Leave a comment

Social media – the megaphone for the village idiot?

One thing that always amazes me about social media is how some people think it overrides basic rules of common sense. If you update your Facebook status to single, your husband/wife is probably going to be annoyed. If you tweet that you are at work with a hangover you’d better be sure that you have an understanding boss. Often it feels that social media is a megaphone for the village idiot.

I’m not a social media Luddite by any stretch and can see the incredible power that channels such as Twitter and Facebook have to bring people together. Take football for example. The connection between highly paid sports stars and the fans that indirectly pay their wages has been fraying over recent years. You’re not likely to bump into Wayne Rooney down at Tescos and all ‘official’ interviews are heavily vetted by agents and PR people, often turning them into bland stories devoid of any interest. Social media and Twitter in particular has provided the opportunity to change all that – footballers (and any other celebrity) can tweet about the most mundane details of their lives. It is kind of reassuring that a multi-millionaire spends his spare time watching EastEnders and moaning about the weather.

But going back to the megaphone/village idiot metaphor footballers need to think before they type. Ryan Babel of Liverpool’s now infamous tweet depicting ref Howard Webb as a Man Utd player has brought the wrath of the FA down on him. While it is fair enough that players need to be careful what they tweet (back to common sense again) it would be a real pity if it stopped footballers interacting with their fans because they are worried about speaking out of turn. Simply engage brain before tweeting – it is football’s chance to build lasting relationships with fans, rather than be seen as overpaid village idiots.

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February 18, 2011 Posted by | Uncategorized | , , , , , , , , , , , , , | 3 Comments