Discounters call the tune

Published: 03 October, 2008

Mirror, mirror on the wall, who is the cheapest retailer of them all? Not an easy one for even the cleverest of mirrors that one, but it is the main topic of the day in boardrooms of multiples and discounters across the country.

Every week the financial crisis gets worse - and what counts as consumer confidence is going down the drain with it. Which leaves our major chains clambering over each other to prove they have the cheapest promotions on offer.

Drinks suppliers have let it be known that some of the Big Four retailers have been holding private supplier summit meetings to get across a very clear message. Drinks sales predictions are bleak. And is getting bleaker each time Wall Street opens for business. Angela Mount in her column this week points to research that we have lost 250,000 wine drinkers in 2008 already.

To help make as good a fist of the situation as we can, the message sneaking down the supply chain is the multiples, despite duty rises and increased costs, still need to concentrate on the value end of the market. And that means the sub-£4 and in some cases sub-£3 bottle of wine. Forget - for now - the £5-plus.

You only have to look at where the big boys are spending their promotional money to get the picture. Tesco, for example, spent an estimated £450,000, on a mass advertising campaign last week to re-introduce itself to the British public as the country's "biggest discounter".

Ironically the only retailers happy to talk about more premium lines are the hard discounters themselves. Aldi and Lidl are boasting increased sales of £5-plus wines and Aldi's new Christmas range includes a whole raft of wines at £6.99.

For years the discounters have swum around, almost unnoticed, the bottom of the retail pool as the big fishes swam above. Nielsen does not even classify them as being in the same fishtank. But it is the likes of Aldi that are now setting the agenda. Which in retail terms is as big a deal as Bradford & Bingley going to the wall.

So anyone looking in the retail mirror is going to find it very distorted indeed.

Richard Siddle is the editor of Harpers magazine.