UK supermarket price war could harm fresh fish sales

Published on
December 22, 2014

Much has appeared in the British media about the current price war being waged between UK supermarkets as they face up to the growing popularity of the German-owned discount chains Aldi and Lidl.

The “big four” supermarket chains — Tesco, Asda, Sainsbury’s and Morrisons — are slashing prices like mad in an attempt to win back customers from the discounters and take sales from each other.

Shoppers are benefiting from this war and a recent newspaper report stated that customers have saved GBP 182 million (USD 285 million, EUR 232 million) during the past three months. Needless to say, suppliers haven’t fared too well as the supermarkets have been looking to them to absorb at least a portion of these price reductions.

However, despite the cuts, the big four all saw their sales drop during this period. Morrisons suffered the worst with a drop of 3.2 percent. Aldi and Lidl meanwhile saw their sales grow by 22.3 percent and 18.3 percent respectively.

Aldi and Lidl thrive by selling a very limited range of grocery products very cheaply. However, it is not just the emergence of these chains that is affecting shoppers’ purchasing habits.

According to some reports, the days when the big out-of-town supermarket/hypermarket outlets reigned supreme are long gone, never to return. Consumers are now buying more of the food items they need from smaller in-town outlets. Online grocery shopping is also on the increase.

And whereas the big supermarket/hypermarkets always have a fresh fish counter, the smaller “convenience” stores usually only sell pre-packed fish products, quite often frozen. The pre-packed route also holds true for Aldi and Lidl.

Fresh (chilled) fish counters need specialist staff, often former fishmongers, to run them and wastage can be a problem. Fish are one of the most perishable of protein foods — their quality begins to deteriorate as soon as they come out of the water — so they have a very limited shelf-life.

These two factors combined mean that fish counters may not be very profitable operations. Indeed, it is suspected that they often act as loss leaders for the supermarkets themselves.

There are various opinions as to what will happen now in the British retail grocery trade. Commentators agree that while most people will still do a weekly shop at a big supermarket for basic items, they will top up their shopping as needed at smaller in-town stores, including Aldi and Lidl.

So while the big supermarket/hypermarket is not yet redundant, its sales are likely to continue to fall. Forecasts by the industry organization IGD show the annual customer spend in superstores and hypermarkets will fall from GBP 73.7 billion (USD 115.4 billion, EUR 94 billion) to GBP 70.8 billion (USD 110.9 billion, EUR 90.3 billion) during the next five years.

At the same time, it forecasts that grocery sales for discount retailers and online will double.

As sales decline, the number of new out-of-town stores being built is also falling and has dropped to its lowest level since the onset of the world financial crisis in 2007-8. As a result the big four chains are concentrating on their existing outlets and opening smaller convenience stores, although there is some evidence that all is not right with these stores either.

So where does this leave the seafood industry? Lidl, which is expanding the number of its stores in the UK, is making a big push to appeal to more middle class customers, as indeed is Aldi. The discounters are moving away from “selling cheap stuff to selling stuff cheaply,” as one commentator put it.

In its festive food brochure, distributed free with a “quality” daily newspaper, Aldi’s fish offerings consist of salmon, prawns and salmon “caviar,” along with cooked Scottish mussels. This is not a surprising range in the run up to Christmas and the New Year, but will fresh fish feature during the rest of the year?

This remains to be seen, but it seems as though overall fresh fish sales in supermarkets could struggle unless the seafood industry shows new ways of appealing to today’s customers, as the mainstream supermarket industry itself will have to do.

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