“Discounter” – beware the risks of misleading channel names

Unconscious bias. That’s what psychologists call it. We give things names but then are largely unaware that this may affect our thinking, perhaps for the worse.

So, when we call stores like Aldi, Lidl and Poundstores  “Discounters” the risk is we then make the shortcut in our thinking that these stores are about offering the same products at a lower price than other stores. Moreover, by implication, we can assume that “mainstream” stores do the opposite, or even more worryingly that if “Discounters” are gaining share then the obvious solutions for other stores is to cut price.

The stores we call “Discounters” for sure have a message of “saving you money” but it’s not by discounting the same products, it’s about offering different products that are the “same quality at a lower price”.  And isn’t that the message all good own labels have had for decades? So are these guys the game changers they get seen as? To my mind, Aldi and Lidl are better described as “private labelled” stores not “discounters”. Is it possible that the better response isn’t to drop prices but to “win the battle on private label”?

Isn’t it interesting that Aldi’s advertising focusses on price comparison to Manufacturer Brands, not rival Own labels?

Moreover, using the simplistic terms “Discounter”, one can forget that Aldi succeeds on many more factors than just price; speed of shop, ease of choice, novelty and “bargain hunting” are all key ingredients. Competitors need to consider these matters as well – hence the very sensible focus right now on range efficiency. “Discounters” are training shoppers to want less complexity.

So I’d argue names are important and in simplifying we must be very careful we don’t bias our thinking, potentially risking very damaging strategy decisions.