Don’t discount these discounters

When it comes to innovation these days, discounters are leading the way in products, services...even the in-store experience

Discounters have realized in the last few years that they can't really get their customers only with the price, so they've evolved their concepts, blurring the format with the traditional supermarket channel, says Ekaterina Winkelmann, senior business analyst at IGD, a U.K.-based non-profit organization that works with supermarket retailers and consumer packaged goods manufacturers across the globe. Here are six discounters we should pay attention to.


Sobeys' replacement for the Price Chopper banner has impressed global grocery watchers. The ethnic offer goes beyond grocery and fresh produce, to include extensive frozen and chilled ethnic items, says Stewart Samuel, IGD senior business analyst. Plus, the layout is innovative, with snaking produce aisles that lead into the bakery. Samuel is also impressed with FreshCo's meat and seafood counters, which are operated by ethnic specialists. "We haven't seen
counters to that extent in a discount store in Canada," says Samuel. For an added effect, live fish in fish tanks underneath the counters replicate the Asian supermarket experience.


Trader Joe's
This Aldi-owned American grocer is truly innovative among supermarkets, says Samuel. Up to 95 per cent of the product range is private label and there's a big emphasis on better-for-you products and locally sourced foods. But what really sets Trader Joe's apart is the festive in-store atmosphere, capped off with ongoing store events and a flyer that looks like it was designed by Monty Python. Perhaps the biggest compliment for Trader Joe's comes not from retail experts but from out-of-town customers. After one trip, many start lobbying for the grocer to open a store in their town.


Spun off from France's hypermarket giant, Carrefour, Dia is about convenience. Stores are situated in city centres and designed to help consumers do some quick top-up shopping. Private label products are a huge part of the mix, as is an impressive fresh department. Dia was one of the first discounters to offer a loyalty card. "Using loyalty card data to understand customers is unusual for a discounter," says Winkelmann. The retailer uses loyalty card data to print off vouchers at the till based on the customer's previous purchases.


The limited assortment German retailer, with stores also in the U.S. is among the most formidable grocers around the world. It's also been touted as a chain that will eventually come to Canada. In the last year Aldi has introduced more fresh items and installed self-service baking machines in-store where customers can get a freshly baked loaf at the touch of a button. In Austria,
Aldi is well-known for its sustainably sourced private-label range that is fully traceable online. Product barcodes can be entered online, allowing consumers to learn its carbon footprint and how many kilometres it travelled to the store.


Think of E-Mart as a Korean version of Target, with spacious layouts and low shelves. It does a great job capturing the energy of a Korean outdoor market, with staff in different grocery departments calling out to shoppers to come over and sample products. "It's not surprising it has the largest share of grocery in Korea as its tasting and sampling efforts far surpass the competition," says Lee Peterson,
executive vice-president at design firm WD Partners, which designed E-Mart Traders, a new warehouse format. Catering to the majority of Koreans who don't cook at home anymore, E-Mart also features an extensive array of "plastic" food displays of prepared items that consumers can find in the refrigerated sections.


This Spanish grocer shows that with the right operating decisions there doesn't need to be a trade-off between low prices and investment in staff. "More than 85 per cent of the store employees at Mercadona are full-time salaried employees who have stable schedules. In the U.S., even full-time store employees tend to be hourly and they can work as few as 30 hours a week," says Zeynep Ton, a professor at MIT Sloan School of Management. Mercadona reduces supply-chain costs by offering a lower variety of products than competitors. It stocks about 80 per cent private label along with fresh fish and produce sections, to resemble
a traditional supermarket more so than a discounter.

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