Competition among supermarkets is fierce. Grocery shoppers hold the power to switch their custom – and savvy ones will do exactly that.
Following in the footsteps of Aldi and Waitrose, Iceland is the latest supermarket to take the reigns as the highest-scoring food retail organisation in the recent UK Customer Satisfaction Index (UKCSI). In fact, the retailer jumped 37 places in the last year to rank as number 10 in the overall report, which incorporates 13 sectors.
Falling shortly behind Iceland is a cluster of both discount and high-end supermarkets, including Aldi, Lidl, M&S Food and Waitrose. Meanwhile, the Big 4 – Morrisons, Sainsbury’s, Asda and Tesco – are left flailing in a battle to retain market share. They are losing out compared to competitors in areas such as trust, transparency and reputation, scoring only 7.8 and 7.9 for trust compared to Iceland’s 8.4 (out of 10). What, then, is Iceland getting right with its customers?
Since the horse-meat scandal of 2013, it would appear that Iceland has worked to rebuild customer trust and reposition itself as a desirable brand. It has made several moves to tap into the public consciousness with customer-pleasing initiatives. This includes the introduction of vegan ice cream and an affordable, award-winning luxury range featuring lobster, wagyu beef and venison, and being the first supermarket to pledge to eliminate plastic packaging from all own-brand products by the end of 2023. Last month, it announced it was expanding its vegan range after sales of vegan products outsold non-vegan equivalents. Last week, it announced the launch of a paper bag trial.
Traditionally recognised as a low-brow budget supermarket, Iceland has worked to reposition itself to appeal across a wide demographic, including more affluent millennials who value ethically responsible and empathetic brands. Alone, these initiatives might be considered flashes in the pan, but combined, and consistently executed, however, brands can start to make gains and reap the rewards of customer trust and reputation.
The winning supermarket spot in the bi-annual UKCSI, unlike other sectors, is volatile and ever-changing. Iceland sits on the podium as number one for now, as many others have before, but this is by no means secure. Aldi has continued its track record of strong growth and reached its highest ever market share, increasing 0.5 per cent points to 7.3 per cent. Waitrose grew by 1.5 per cent. Iceland should not rest on its laurels if it is to maintain this unprecedented top spot. Rather, alongside increasing customer expectations, it should be one step ahead to consider the continued investment it can make to excel in customer service.
In a highly competitive sector, with only 4.4 points separating the highest and lowest scorers, organisations need to maintain a consistent focus on understanding their customers’ needs, high standards of employee helpfulness and competence, quality and range of products and competitive pricing.
At a time of dynamic change and intense competition, it is worth remembering that over the last three years the supermarkets who have outperformed the sector average for customer satisfaction have achieved the strongest revenue growth. Maintaining this consistency will be key to building trust and sustainable success for Iceland and other brands in the sector.
Jo Causon is the chief executive of The Institute of Customer Service