The discounter revolution shakes up the high street

A woman in an airline uniform sits in a bar by herself watched by a man a few tables away.  Eventually he goes up to her and thinking he has a cute chat up line, says ‘Are you with the world’s favourite airline?’

No answer.  

He tries another 'Do you fly the friendly skies of United?’ Again no answer.  He continues with a couple more airline taglines. Finally she turns to him and says ‘F**k off!   Oh, says the man, I know, it’s Ryanair.

Is Ryanair still the poster boy for cheap but aggressively unfriendly customer service? With the persistence of rumours such as removing toilets on planes and introducing straps for customers to hang on to as in buses (both probably apocryphal) the reputation certainly still persists.

But several weeks ago I flew to Perugia on a perfectly comfortable plane, polite checkin and cabin staff and dead on time. The only thing that made me reminded me of the mean-spirited owner was the thoroughly tacky checkin fascia (as though to deliberately insult the taste of the customer) and the absence of a pocket on the seat in front.
 
But now that we read pundits encouraging Tesco to go back to its roots and institute dramatic price cuts to compete with the discounters, we may be in for a long – maybe indefinite – period of cheap products and lousy service. Particularly now that the snobbery traditionally attached to places like Poundland, Aldi, Lidl has all but disappeared. It began to disappear years ago with easyJet and the budget airlines. Now, a quick look at the Aldi and Lidl parking lots where Mercedes and BMWs sit side by side with Fords and Vauxhalls, tells you that the snobbery is all but gone as customers take advantage of what is beginning to look like a real upheaval in retailing. As with Ryanair, if you can live with the limited service, the products are fine – and spectacularly cheap.

The implications for the traditional high added value stores are considerable. For example, Waitrose has done superbly with their range of commodities priced comparable to Tesco. But that was when Tesco’s prices were lower but not dramatically lower. Keeping up this strategy will be painful for Waitrose if Tesco does decide to take the pile them high ell them cheap route. Added value means different goods, better goods and better service, all of which will be an even greater challenge to a traditionally high value retailer.  Melanie Howard develops the theme of the rise off the discounters in the September issue of Market Leader. This is a threat that will impact retail more than anything we have seen so far.

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