Taking a look at the grocery retailers digital strategy

Last week, I noticed that Aldi had reported that growth had slowed, but more recently there was an article suggesting that Aldi is now the second biggest supermarket chain in the UK 🧐.

I always like to take a look under the hood when I see these types of headlines and assess the digital landscape of the category. I realise that in store shopping completely outweighs that of online, but it is a continuous growing percentage point and the grocery players need to ensure their digital offering is best in class.

Let's take a look. 👇

Kantar data shows the market share growth that both Aldi and Lidl have made over the past ten years to break into the top six, with Tesco, Sainsbury's and Asda all losing ground to the discounted options:

However, over the past 12-months, Aldi has seen its market share drop from 10.2% to 9.8%, whilst Lidl has grown slightly:

Looking at the Food Price Inflation Chart, there is a downward trend since Jan 2023 regarding the cost of food.

Could food becoming cheaper be a reason for customers to return to the bigger supermarkets chains? The Tesco chief seems to think so. In the UK's leading retailers earnings today (10/04), Ken Murphy said that "price inflation in groceries had 'lessened substantially'", but he of course needed to show a sympathetic side and also remarked "things were still difficult for many customers" (which they very much are).

So, as the supermarkets continuously battle it out for price and value, which was a strong theme in Murphy's statement, how are their marketing strategies playing out?

Looking at brand searches in the same time period as the food price index, there isn't any indication that when prices were at their highest, there was a sharp rise in searches for Aldi or Lidl, although you see the former increasing in demand during the pandemic.

It is interesting to see that Sainsbury's brand searches have declined since the end of 2021, with no clear reason as to why. This is worth further investigation. Tesco is still the dominant force, despite losing ground in share of search over the past twelve years.

Marketing channels

Looking at the main channels (as a % to each retailer), it is clear to see that nearly all, bar Morrisons, capture significant traffic through organic search. This will of course be a mix of brand ('Tesco') and generic ('online shopping') searches:

Let's take a look at a few channels and see if there is any insights to gather.

Paid Search

Sainsbury's are the big players in PPC, with Similarweb estimating they spend significantly more across desktop and mobile than competitors.

I was surprised to see the gap between the brands but it appears (well, accordingly to SimilarWeb) that Sainsbury's bids heavily on protecting its brand, whilst dabbling in competitor bidding:

I did take a look at "delivery" terms and Sainsbury's is pretty aggressive on bidding for competitor brand delivery terms:

Organic search and content strategy

As mentioned earlier, this is the biggest traffic to the grocery brands, however - certain brands are far more successful at obtaining visibility across generic terms than others.

Brand traffic is a result of brand activity away from search. Whether it be TV, OOH or radio - it is essential for a brand to build mental availability so that when a customer decides to search for a grocery brand, the brand is front of mind.

When a customer does search for a branded term "Sainsbury's", it is essential to have an engaging and enticing snippet in the search results:

The above shows a quite bland title (i.e. it just says "Sainsbury's"), which could be updated to better reflect what the brand does, which you can see Tesco does nicely:

This isn't about "rankings" or "SEO", this is about customer experience and providing useful information in your online shop window. Sainsbury's spends millions on it's brand, so I'm sure they'd easily update this to be more reflection of what the business offers customers.

Lidl's is a bit weird. I get "non-food" is "stuff we sell that isn't food", but they could better describe what this is. I can only remember having "non-food" on my first lads holiday abroad to Mallorca back in 2000, but that is a different story.

Morrisons main snippet looks OK, but the sitelinks (automated via Google) indicate an issue with crawling and indexing, which no doubt is a result of an outdated marketing techstack.

"Clear all" will be an anchor text pointing to the main navigation page and thus is a signal to Google that this page is about "clear all". Online shopping also takes me to a strange navigational menu:

The above examples focus on brand and there is tons of optimisations that can be done to help improve CTR (Click-Through-Rate) and offer a best in class customer experience - I've only listed a few. For generic search, having a customer-centric content strategy is crucial, which should includes targeting different parts of the funnel to meet a customer need.

For example, Tesco has invested, which I know for a fact, in improving its Organic Performance over the years and for a subcategory that I selected using Pi Datametrics , you can see it's dominance and consistency over the past 12-months:

Firstly, what is going on with ASDA? 🧐 This type of movement is unusual and would indicate a deeper issue.

Last summer/autumn, there were a significant amount of Google updates (these can see a big swing in visibility for a domain) - but the sharp drop, doesn't overlap until the end of the August update.

Billie Geena Hyde over at Salt.Agency covers ASDA's technical difficulties very well here. This can 100% affect a domains visibility in search and it appears (without having a super deepdive) that these issues still remain (the Salt Agency blog is a few years old now).

Take a look at this screenshot for the query term "Flash Bleach spray", which shows three different URLs ranking in Google's top 100 over the course of 11 months.

URL A (blue line) appears to have been retired and then redirected to URL B (green line). URL B took over from URL A, but then struggled to maintain visibility, with URL C (purple line) dragging performance down and replacing URL B in Google, but much lower. I know... 😱

Huge sites like this are challenge to manage, but it is essential to not let indexing and product selection (i.e. many different URLs for variations of a single product) get overwhelming. The above gives a flavour for what is happening (across one query term) and this type of fix isn't usually a quick one!

Of course, the consumer has an abundance of choice in Google outside of classic blue links, with Google shopping and product listings (organic) that come before:

I'm not that familiar with organic product listings in Google (it was rolled out after I moved into a broader role), but this seems like an opportunity for the likes of Aldi to optimise and appear front and centre for product searches in Google:

Finally, as mentioned, a customer-centric content strategy is essential to address customer needs right across the funnel. From "buy wine" (i.e. bottom funnel) to "what should I have for dinner?" (i.e. upper funnel), a smart brand will invest in content to meet customer demand.

Focusing on upper funnel content, despite the rise of Instagram and TikTok offer beautiful imagery and vertical video content tutorials, "recipes" is a very popular topic, as you can see in the chart below (no doubt, that spike in April 2020 was for "banana bread" 😬 ):

Getting in front of customers before they even start to think of ingredients is essential, and it is clear to see the investment Tesco has done on their content strategy to include this.

Hosted on a subdomain "Real food" (as opposed to the weird "Non-Food" Lidl promotes), Tesco.com ranks for a wide range of popular recipes that users turn to Google for.

Now, recipes is a huge space and the brands face stiff competition in sponsored links (i.e. they need to pay for this placement), BBC Good Food and the recipes carousel (this can be explored using the following schema markup):

Tesco has invested significant time and money into building out a recipes hub. They have a wide range of excellent recipes (for this topic there are 30 individual recipes for 'slow cooker') that have a step by step guide along with excellent imagery:

For conversion, Tesco.com has a really easy way to add all these ingredients to your basket and totals up the cost:

A very simple but yet effective way to engage with customers that are looking for top of funnel content. Why go elsewhere when it is as easy as this to get your ingredients?

It is hard for competitors, especially those that don't have as much marketing budget as the big T, to replicate - but with enhancements in AI over the past 12-18 months, perhaps this could be a quicker way to get their product to market. Check out my slow-cooker beef stroganoff recipe image that I just made (via the help of Mid Journey).

So, Tesco.com dominates for generic search terms, with the discount retailers not performing at all (at least for the categories listed above), with Lidl and Aldi scoring the lowest in terms of visibility.

Please note, visibility is a guidance to get a temp check on organic performance. Whether this query term converts (i.e. sign up, app download, revenue) on the landing page provided based upon the UX, product fit and proposition is most important.

Brand building

Unfortunately, I could only find data from 2020 looking at 2019 vs. 2018 spend. No doubt, the following COVID-19 years resulting in spending increases (given the importance of supermarkets and all those emails I received from each CEO telling me how important I am...) and in more recent years with a focus on price, given the inflationary pressures.

So all retailers have invested significant amounts in brand over the years, whether it be "Every little helps" from Tesco, the ASDA jingle (do they still have that?) and of course Kevin the Carrot.

Kevin the Carrot has been a runaway success and is now a household name. You could argue that the nation's favourite vegetable (at Christmas anyways) gives the Meerkats a run for their money?

System1 gave the the ad excellent results in terms of star (Long-term market share growth) and spike (Short-term sales potential - perfect for Christmas), but modest in terms of brand recognition (which you can see on the FluencyTrace chart below)

When comparing consumer behaviour after viewing the ad versus the Meerkats it is clear to see the popularity of Kevin the Carrot in search:

Tesco has built mental availability over the years and is the UK's largest supermarket (in terms of ad spend and stores) and has continued to dominate, although has lost share of search over the past 10 years due to the rise of the discount stores.

Given the climate we have found ourselves in over the past two years, the majority of creative that I have seen across TV/Social has focused on competitive pricing - although you do get specific campaigns focusing on children's health (for example).

Charles Allen, a retail analyst at Bloomberg Intelligence, when asked today (10/04) about "what Tesco is doing to hold onto customers?" he remarked that "mostly it's been very price competitive".

"Mostly it's been very price competitive". - Charles Allen

Tesco has a range of creatives promoting price savings with Tesco clubcard:

Sainsbury's has "Hey, big saver!" promoting their Nectar card offering:

And finally, Aldi is unsurprisingly also pushing "Britain's cheapest supermarket" before the ASA pulled their Britain's cheapest Christmas dinner ad, for it being "misleading":

So, in recent years the brands have very much doubled down on "look how much you can save with us" versus anybody else.

App promotion

Grocery retailers need to have physical presence across all digital channels, so a quick look at their app strategies (this could be a full article alone!) and install penetration on Android (unfortunately, I can't get Apple's data):

Tesco has grown its install penetration over the past 14 months with nearly all other comparison brands remaining pretty static. Install penetration is the percentage of devices in the defined market with the app installed - so Tesco is the only brand to see decent growth.

The App Store and Google Play is a whole other competitive arena, as the food delivery players take an aggressive stance to capture demand. Here is Just Eat bidding on "sainsbury's" in Apple Search Ads (coincidentally, their colours look a little similar...):

I do not have a report to showcase their approach, but Sainsbury's and Tesco's are both utilising Apple Search Ads (ASA) to bid on competitor terms and defend their brand.

Category assessment

Having assessed the main marketing channels, we can now take a look at the category overall. Given what we've seen above, there is no surprise that Tesco has the highest traffic share and most monthly visits.

Sainsbury's and Asda battle it out for second place and Ocado is in a distant third. The discounter brands really don't make a dent in traffic share, but that could be due their prioritisation of the in store experience over online?

The trends look pretty consistent over time, only with 'others' increasing in share.

As Byron Sharp explains in "How brands grow", brands with smaller market shares have fewer buyers, who are also less loyal (loyalty declines with market share) - this very much applies to traffic share as well.

As you can see below, Tesco's visitors are 'more loyal' with a higher percentage of users that visited only one site (dark blue) using Tesco.com:

Concluding thoughts

OK, there was a lot to take in there. The past four years have seen a huge shift in customer behaviours, through a pandemic, a cost of living crisis and more choice (especially with food delivery services) available to consumers.

Grocery retailers have focused predominantly on price and value, with different retailers adopting different marketing strategies. I was surprised to see the gulf between Sainbury's and the remaining players (although the comparison didn't include Ocado.com nor Asda.com, both of which have spent significantly in paid search over the past 25 months).

Tesco.com is still the dominant force across digital, despite losing share of search over the past 12 years. The stock was up 3% today off the back of a positive earnings.

Asda.com should really focus on their website hierarchy and better optimise the crawling and indexing of their website, as it does appear they are leaving money on the table.

Aldi.co.uk and Lidl.co.uk should look at doing a better job of building out their content strategy to target customers at all stages of the funnel. There is evidence that this has been attempted, but without the expertise needed to execute successfully.

For example, the following page on Aldi's web is for "breakfast recipes", this could be optimised with:

a) More recipes

b) A cleaner URL

c) A better title tag and introductory content

Taking a look at Aldi AU, they have a much better landing experience with an investment in good content, indicating Aldi hasn't a global view on marketing (I'm unsure of their setup - but this could be replicated):

Using hreflang, Aldi could scale their content and publish on Aldi UK, but that is for another article...