UK Edition Newsletter - January '14

For at least two of the big four UK Supermarkets, 2013 was an uncomfortable ride, which culminated in a very rocky Christmas.  Despite expectations of sales improvements in the Christmas quarter both Tesco and Morrisons experienced a decline in like-for-like sales, with drops of 2.4% and 5.6% respectively.

Of the big four only Sainsbury’s can be said to have any cause for celebration.  Posting only a tiny sales increase, it has avoided seeing an actual decline and has now squeezed past Asda to regain the No. 2 slot in terms of market share. 

The undeniable winners in this sector have been the discount stores Aldi and Lidl, with some of the more specialist stores such as Iceland and Waitrose also posting a rise in pre-Christmas sales.
Could we have forseen these results?

Keller Fay’s WOM sentiment measure (asked about branded conversations) allows us to look at how the supermarket brands are being discussed in the run up to Christmas.  We compared nine of the UKs biggest supermarkets on sentiment and found that Aldi performed best in terms of net positive sentiment (achieving +66% net positive).  Aldi also recorded a much higher share of buzz (TalkShare™) than would be predicted from its market share.

Waitrose came second in terms of sentiment, Lidl was #3 and Iceland was #4. Of the big four, Tesco was the worst performer (with a significantly lower level of positive comment and high levels of mixed comment ==> net positive of only 30%). Sainsbury’s nudged ahead of the competition here by prompting a lower level of negative sentiment compared to its main rivals, and by generating positive conversations about its feel-good ‘Christmas-in-a-Day’ TV campaign.

Morrisons, however, did not generate the levels of negative sentiment that might be suggested by its sales decline. In fact, sentiment was only marginally lower for Morrisons than for Asda and Sainsbury’s.

So why the drop in sales at Morrisons? A lot of this is to do with the lack of an online offer and the shortage of smaller convenience stores as has been discussed widely in the media. But another key factor is the fact that WOM volume is relatively low, given the size of the brand. Morrisons’ TalkShare among the top 9 was only 8.6% compared to an equivalent market share of 12%.  One possible issue is that the brand’s Christmas advertising was not especially talkworthy.

The store has already signed a deal with Ocado to take action on providing an online offer.  Now they need to get people to talk more frequently about all aspects of their stores.

Positive WOM is great to have, and achievable via any channel: phone, in-person, email, social.  But on balance WOM via online channels is consistently a little more negative, and less positive or neutral.

This trend is broadly consistent across age groups, but is not consistent across product categories.  In the UK, the more polarising  aspect of online buzz is more apparent in fmcg, products and appliances for the home, and products for children.  In contrast, in categories such as finance, the pattern is not apparent.

Several factors contribute, but in some fmcg categories we believe that online conversation is limited to those with unusually strong interests towards brands/products – to join an online debate about fabric conditioner you have to be quite committed, and perhaps have a gripe you want to air.   Offline, conversations about such brands happen more spontaneously and naturally, and seemingly more positively.

In categories where opinions are perhaps stronger (and more negative overall), such as utilities and banks, this effect is less apparent.  Here, negativity is apparent in all channels and is not fuelled by the ‘point-to-prove’ nature of online conversation.

The extent to which brand sentiment in online conversation reflects the wider world will therefore vary considerably.  There’s no single pattern which fits every brand and category, and brand owners need understand their own WOM dynamics.  Call us and we’ll show you how….

The American Marketing Association Foundation (AMAF) announced on January 7th that Ed Keller and Brad Fay’s The Face-to-Face Book: Why Real Relationships Rule in a Digital Marketplace and Daniel Pink’s To Sell is Human: The Surprising Truth About Moving Others as the co-winners of the 2013 Berry-AMA Book Prize for the best marketing book.

According to AMA VP of Publications Robert Lusch, “There were two books that rose to a level of excellence that had an amazing similarity in terms of communicating a simple but powerful message.  Ed Keller and Brad Fay in their book The Face-to-Face Book provide us with strong evidence that in today’s high tech digital world, face-to-face real relationships matter most”.    More at http://www.themarketingfoundation.org/berry_book_prize.html .

Curious to know more about anything you have read in the above articles?  Feel free to contact UK Managing Director Steve Thomson at sthomson@kellerfay.com .