Friday, October 13, 2006

Low Prices Don't Rule in the UK

An article in last week's Economist magazine discusses the disappointing performance of Asda, the British discount supermarket chain purchased by Walmart in 1999. The reason for Asda's stuggle? Low prices don't seem to matter that much to British shoppers these days.

Whereas in the U.S. (as the huge success of the Super Walmart grocery business has proven) low-cost trumps all, in the UK less than 50% of shoppers say they consider price when selecting food. British food habits are changing: celebrity chefs are hot on UK TV, Britons are both eating out more often and cooking more fresh meals from scratch at home. Quality--or, at least, the perception of quality--sells now, with premium and organic brands growing in market share.

It's an interesting sign that while low prices are an important factor in retail success, they aren't everything. It will be interesting to see if similar trends begin to play out here in the U.S., where the market seems to be increasingly polarized between high-end/organic/expensive (WholeFoods) and low-cost/low-quality/industrial (Super WalMart), without much room in between for people whole like traditional, fresh, wholesome foods.

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