Who likes self-serve checkouts?

Not consumers, judging by the reactions received by many grocery chains. Sainsbury's recently introduced card-only self-serve checkouts, to streamline the process of paying and leaving the store in this age of often cashless transactions.

Instead, the new self-serve checkouts frustrated some of Sainsbury's shoppers, because the staffless tills don't allow for weighing of fresh merchandise or for shoppers who bring reusable sacks.

Lidl's staffless self-serve checkouts in Maldon aren't pleasing customers, either.

Of course shoppers want to complete transactions quickly and conveniently. One study found that customers dislike waiting, and will tolerate a queue time of only 6 minutes. Understanding consumer behaviour is important if retailers are to compete effectively and provide what shoppers want, in the way shoppers prefer to be served.

For retailers, however, self-serve checkouts mean lower costs. No doubt that's behind the trend toward more self service. Australia's Woolworths recently announced the installation of more self-serve checkouts at a number of its downtown locations.

Rival Coles is testing new limits to speed up self-serve transactions for the convenience of all. 'Coles is trialling a 12-item limit on self-scanning checkouts in a small number of stores as part of our ongoing commitment to improve customer service', the Australian retailer has announced. This may also be a way to combat shopper theft at self-serve checkouts.

Competing with Aldi

Aldi, the deep-discount grocery chain based in Germany, is known for low prices on brand names and on non-branded merchandise. In fact, Aldi offers a Shop Specialbuys app to alert shoppers when their favourite products are going on sale (get ready to 'swipe and shop').

A former exec who helped set up Aldi in Australia explains the retailer's strategy: '. . . the deal between the supplier and Aldi is; first Aldi will take a larger pack size, often a pack size that is exclusive to Aldi so some economy is represented here and that Aldi does not embarrass other bigger retail customers . . . of the brand with its selling price'.

Now Aldi's head in Australia notes how the company's expansion has affected retail pricing: 'Our prices are always the lowest, so we have observed the market getting a little sharper in prices … at the same time as our competitors have been lowering prices, we have as well'. Aldi's expects to continue acquiring market share in Australia, aiming for as much as 15% of that market within a few years.

One way competitors are fighting back is by not only increasing their private brands but in some cases, by blurring the line between national brands and private brands. Woolworths in Australia recently relaunched some of its store private brands without highlighting the retailer's brand ownership on the front label. Products formerly branded prominently as 'Woolworth's Gold' now bear the brand 'Gold' on the front label, for example, with the Woolworth name on the back label.

Woolworth says it has been fine-tuning its Australian private brands: 'Over the last year we sought insights from our customers as we looked to enhance our range of products. Woolworths branded and non-branded ranges reflect our commitment to quality and value'.

Meanwhile, Aldi's low-price grocery rival in Germany, Lidl, is moving further into markets where Aldi has established itself--such as the US market. 'We are in the early stages of our preparation to launch in the U.S., and our focus right now is in our operations along the East Coast and opening our first stores no later than 2018', says a Lidl exec. Lidl competes against Aldi by opening larger stores and stocking a wider assortment of merchandise compared with Aldi.

Watch for price wars when Aldi targets a market--and watch for competing stores to slash prices or risk losing shoppers who follow the bargains.

Aussie Animals boost shopping at Woolworths

Woolworths, the largest Australian retailer and ranked 15th in the world by revenue, follows a four-pronged strategy for continuing growth:

1. Extend leadership in food and liquor

2. Act on the portfolio to maximise shareholder value

3. Maintain the track record of building new growth businesses

4. Put in place the enablers for a new era of growth

Woolworths has been implementing its strategy as planned. Not only is the retailer increasing its sales of food and liquor--with higher prices, higher market share, higher customer counts, and higher per-customer transactions--it is adding to its strength and preparing for new growth by expanding into online retailing. It purchased EziBuy Holdings last year to gain market share and expertise in e-commerce. 

The retailer's point of differentiation is fresh, local quality--specifically, that 96% of its fresh fruits and veggies are grown in Australia, and 100% of its meat comes from producers in Australia. And, thanks to the popularity of its private label foods, careful price negotiations with suppliers and a focus on reducing waste, Woolworths consistently enjoys gross profit margins at or above 23%.

From a marketing standpoint, Aussie Animals trading cards get the credit for at least some of the recent revenue growth. The cards are actually free: Shoppers receive 4 free cards for every A$20 spent in a local Woolworths store. In other words, the cards act like a loyalty reward programme--the more money you spend, the more cards you receive. 

When Woolworths launched the trading cards in mid-2013, children found the colorful cards (depicting native animals) irresistible and began collecting and trading them (in school and on Facebook). 

Immediately, parents were implored to buy more at Woolworths so kids could collect the entire set. A lively collectibles market sprang up online. Woolworths posted programme updates on Facebook (where it now has nearly 600,000 likes) and created a separate swap zone for trading the cards.

Then, in early December, Woolworths introduced a special holiday set of Aussie Animals, reigniting trading card fever at the start of the year's busiest shopping period. And it worked.

Clever marketing? Clever competitive tactic? Here's what the Daily Telegraph said:

Whoever came up with this little - let's call it a racket - is an absolute genius. It is the science of peer pressure and parents are not immune.