Fighter brands and the Aldi response

Here is an interesting read about Tesco's response to Aldi, which now includes a "fighter" brand approach. From the Branding Strategy Website:

The marketer who is bored with the world's 4th largest retailer is bored with life. If you have been into a Tesco store recently, you will already have seen a new line gracing its aisles. The 'discount brands at Tesco' range has been hailed by chief executive Terry Leahy as the biggest change in the brand's offering in more than a decade.

The range includes 34 brands across 400 categories. Among them are Country Barn cornflakes, Mermaid Buy fish fingers, Gold Sun vitamins and Shanghai Garden sauces. According to commercial director Richard Brasher, Tesco has seen 'an opportunity between the various levels to make sure there is a different proposition for consumers'.

In the 'good, better, best' own-label triptych that Tesco made famous, the discount range is priced above its Value line, but below branded offerings.

The products look more Aldi than Tesco. The German retailer has traditionally avoided using its own brand name on any of its products, instead using a house of brands architecture featuring two-dimensional brand names such as Tundra Bleach and Golden Nectar Honey, which it invents with the help of the major manufacturers who supply the products.

This approach is typical in Germany, where the name of the store is rarely used on private-label goods. The array of brand names also helps foster the illusion of choice in a store that usually contains fewer than 1000 stock-keeping units, of which 95% are Aldi own labels.

Tesco's traditional approach has been very different from Aldi's. Like most British retailers, it has used a branded house architecture, using the Tesco name on everything from its Value line to its Finest offering. However, the supermarket's latest line is clearly a fighter brand range designed specific-ally to replicate and compete with Aldi.

This is a remarkable turn of events because the standard line on fighter brands - those created at a different price point to target a particular competitor - is that they almost always fail.

TK: Check out the rest of the column when you follow the link. It will be interesting to see if the produce aisle sees more evidence of "value branding" in the year ahead.

Fresh & Easy : spin cycle

Tesco has attached some numbers to the Fresh & Easy rollout in the U.S. Here is some coverage (and unavoidable spin) found on the Web:

Fresh & Easy reports $135 million in sales From AZcentral.com

Wonnacott said his stores' "sales densities are building well" and have average weekly sales of $11 per square foot. "Our best stores are now running at more than $25 per square foot," he said.

Grocery analysts and Britain's Tesco PLC, Fresh and Easy's parent company, say a typical U.S. grocery store averages $9 to $10 in weekly sales per square foot during the first year of operations.

"I would say they are hitting the target," said Jim Hertel, managing partner at Willard Bishop, a food-retailing consulting firm in Chicago that has studied the small grocery trend in Phoenix.

Tesco encouraged by progress at Fresh & Easy From IGD Retail

Tesco also reiterated that its fresh food focused strategy and private label products have been well received by customers. Sales of fresh food and Fresh & Easy branded goods represent 60% and 72% of total sales respectively


PP

One thing that did come out from the report is that Tesco owes a lot of people, including the Pundit, an apology.


TK: Being a dominant world retailer means never having to say you are sorry, so naysayers may never get their apology even if they were more right than wrong about Fresh & Easy.