“Is price important to speciality food shops?”

15 March 2016, 10:18 am
Expert Eye by John Shepherd

Known Value Items or KVIs are literally the bread and butter of supermarkets and convenience stores. Not only because bread and butter features on the list of items, but because they are the products that form the price perception of the shop in the eyes of the customers

The battle for low prices is constantly raging across the pages of newspapers, and the rise of Aldi and Lidl can testify to the importance of successful pricing strategies.

The definition of KVIs, to my mind, is that they are frequently purchased products in the high volume low margin category with what is often described as a low emotional connection – such as household products and basic commodities.

However, for speciality food shops competitive prices are not necessarily an option. It is more about creating compelling retail environments with exclusive products and high customer service standards. This is the pursuit of a high value and high emotional connection strategy. The price of individual products is of much less importance – subject to a cut-off point, of course.

The starting line in selecting the retail price for delis is often what constitutes a suitable margin and working from there. In our particular case at Partridges, (in the rarified atmosphere of Central London), I am afraid to say checking the prices of competitors is not something that we are accustomed to carrying out on a regular basis. So I recently set out on a personal mission to explore this topic in a totally unscientific trip around the food halls and delis of Central London in search of Buffalo Mozzarella, a product that I thought would be easy to compare and pretty much ubiquitous in speciality food shops.

In total I visited nine shops – four speciality cheese shops or delis, four larger food halls and one major supermarket. It is interesting to note that out of the nine shops, seven different mozzarella were available. Two of the shops did not actually stock it. Four of the Mozzarellas were DOP, three were not and one was unpasteurised. The actual price of the Mozzarella, excluding special offers, differed by over 60%, with the cheapest being bought unsurprisingly in the multiple at £1.59 for 100g and the most expensive being bought at £2.65 for 100g. When our panel of experts carried out a taste test it was the more expensive Mozzarellas that were preferred.

Carrying the unscientific experiment further, I checked the price of farmed smoked salmon where it is difficult to get a like for like basis and where prices ranged from £3.95 to £9.00 for 100g and from £6.44 to £10.50 for 200g. Prosciutto di Parma, in a more limited check, went from £4.50 to £5.50 per 100g but was not available in as many locations as I expected.

Different retailers clearly have different approaches to pricing but similar approaches in the two other areas of exclusive products and high customer service standards. Looking at our own experience at Partridges, we try to cover selling exclusive products in a number of ways. Firstly, our own range of products is made wherever possible to exclusive recipes. This has been most successful in our own range of tea but is not always successful in other categories. We are also trying to introduce the Startisan ‘stall to store’ scheme whereby start up businesses who trial at our food markets successfully are allocated space on the shop floor. These products are generally unique, often exclusive to us and frequently of very high quality. Unfortunately, like many good ideas they do not often sell well.

Finally there is customer service, a topic which always induces a sharp intake of breath whenever discussing it with colleagues in the trade. We have all experienced depressing episodes when this has gone alarmingly awry. In particular, it is always hard to balance issues of customer service with security issues. On one occasion, a security guard from another shop asked us to detain a customer who had shoplifted elsewhere because he felt it was too risky an operation to carry out in his own shop. On my trip around London I did not encounter any shoplifters, but there was a distinct impression of overstaffing which I recognise from my own experience and of course in consideration of the wider variety of tasks speciality food shop personnel are expected to carry out. Whichever shop cracks customer service deserves the very best success.

There is another element that I have not referred to above and which I would like to talk about in my next article. It involves a trip to one of my favourite cities – Bologna.

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