Dive Brief:

• Growing competition in the U.K. grocery market has spurred traditional grocers like Tesco, Sainsbury’s and Waitrose to invest in sophisticated lifestyle marketing, according to Contently. 
• These strategies include print and online magazines, YouTube channels and high-end advertising focused on differentiating the retailers from their competitors.
• The entrance of Aldi and Lidl to the U.K. market more than 20 years ago made many traditional grocers reassess their market positioning.

Dive Insight:

U.S. grocers are facing a situation that’s eerily similar to what British retailers faced more than two decades ago. Struggling to differentiate themselves in a crowded market, hard discounters Aldi and Lidl pose another threat. 

Should supermarkets, particularly traditional ones, rethink their marketing and advertising to gain an edge? It could be the most effective way to accentuate their strengths. As the Contently story notes, market research conducted several years ago by Tesco found that consumers had a very low opinion of the company’s food, even though it beat out rivals in blind taste tests. So Tesco invested in “Food Love Stories,” a series of ads that highlighted local producers like Heygates Bakery and Wyke Farms to build consumer trust. 

Other grocers followed suit, hiring pricey ad firms to develop funny, touching, and elaborate commercials. The point was not to just get customers’ attention, but to captivate them. From Sainsbury's special-effects loaded holiday ads to the retailer's supermarket rap video, British grocers are working hard to stand out from the crowd. 

With a few notable exceptions — a Wegman’s ad starring Alec Baldwin comes to mind — U.S grocery ads are pretty conventional. Social media and in-store magazines are a bit more sophisticated, but the focus of most grocery marketing tends to be on traditional values like price, service, quality and community.

Those values certainly helped grocers stand out twenty years ago, but these days, they can contribute to a feeling of sameness among competitors. Pricing can be a differentiator, but Aldi and Lidl, not to mention an ever-expanding Wal-Mart, will continue to erode that advantage.

Supermarkets should really consider what it is they do best. Many like to advertise their “fresh” appeal, which is appropriate given their increasing focus on the store perimeter. But what, specifically, makes a company fresh? Is it prepared foods? Local produce? Why not develop separate marketing campaigns for each section of the store? Why not try humor, or really make a play for hearts and minds as Chipotle did a few years back (before its food safety woes), with an animated short called “Back to the Start”?

It’s tough for grocers to justify big marketing spends in a tight, low-margin industry. But it may be necessary to stay ahead of the competition. Whole Foods, which may be facing more competitive pressure than any other large chain, recently invested in TV commercials that spotlight the company’s different departments, like produce and seafood. The differentiating message: “Values matter.”