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Is Ramsay enough to pull Checkers some high-end shoppers?

Ramsay meals LCheckers recently announced a new partnership with celebrity chef Gordon Ramsay and his daughter on a range of kids’ convenience meals. Will it work in upping its image as a purveyor of quality at a good price?

In a hive of lunchtime activity, customers occasionally sample the neatly chopped hot cross buns, cheese and crackers on display: a common scene in the stores of upmarket retailer Woolworths, known for the quality of its products.

And quality is important for customers such as Michelle Ferhrsen. Standing in the fresh-fruit aisle of the Woolworths in Rosebank, Johannesburg, with a trolleyful of clothing and groceries, she said: “Woolworths, especially their fresh products and their fresh produce, is better quality. It does last longer and is appealing to look at.

“I have tried Pick n Pay, I have tried Checkers as well. In this economy, you have to try things. But even though Woolworths is more expensive, when it comes to fresh produce, it lasts longer.”

With food inflation persistently high, even the one-percenters are looking for alternatives as they come under strain .

But it seems that, when faced with quality vs quantity, the former leads.

When the Shoprite group acquired Checkers in 1991, the stores targeted lower-income consumers, but in 2001 the group repositioned the brand to attract middle- to higher-income earners.

Sixteen years on and Checkers recently announced a new partnership with celebrity chef Gordon Ramsay and his daughter on a range of kids’ convenience meals.

Ramsay featured in Checkers adverts several years ago. Now his ‘Oh My Goodness!’ range is being rolled out to appeal to upper-middle-class parents who shun added sugar, salt and preservatives.

It includes meals such as Beefy Cottage Pie with free-range beef mince, for R29.99.

But industry commentators remain sceptical about Checkers’ chances as a high-end retailer.

Alec Abraham, an equity analyst at Sasfin Securities, said although Checkers “constantly try to punch above their weight in the upmarket food and grocery segment”.

He believes their marketing initiatives to position the chain as an upmarket brand are “nothing new” and by virtue of its relatively short duration, it had seemingly failed to change consumer perceptions of quality.

“They were latecomers to opening stores in upmarket areas. While they are opening a lot more stores in upmarket areas, I think they are still relatively under-represented,” said Abraham.

He said Checkers was still perceived as a mass-market retailer rather than a premium retailer, a perception founded on the shopping experience.

The Shoprite group under CEO Pieter Eng elbrecht has 196 Checkers stores compared to 439 stores for the group’s discount retail brand, Shoprite in South Africa .

Ashraf Mohamed, chief investment officer at JM Busha Investment Group, said the biggest expense for food retailers was rental.

“Their rental line is the one expense that they will look to drive lower and what you are going to find is more stand-alone stores, so more of these food stores like Checkers and Pick n Pay will start moving out of shopping malls” to secure lower rentals, said Mohamed.

Although supermarkets have been anchor tenants in shopping centres for years, “it’s not paying. Pick n Pay has proven it with Nicol on Main [in Bryanston]. They are saying that is the model that they should be adopting over time, rather than finding themselves in the shopping mall”.

Which is perhaps why, as Ferhrsen said, “there are a lot more Woolworths than there are Checkers stores. Woolworths is more convenient, because there is one practically on every corner, whether it’s clothes as well, or just food.”

Abraham said Checkers was still perceived as a mass-market retailer rather than a premium retailer, a perception that will be difficult for it to change.

Mohamed said changing consumers’ perceptions “will take them at least three years to do”.

He added that for people to have the right perception about the brand, store presentation had to change and “then you’ve got to prove that the quality of the food is equal to that of Woolworths. It has a lot of hoops to jump through and it’s going to take time.”

Sébastien Delsemme, a consultant analyst at Kantar Retail, unpacked the marketing behind “winning the shopper”.

Understanding how the shoppers made decisions about where to buy and what to buy had become a science beyond just understanding how somebody used or consumed a product or service, said Delsemme.

He said that through a better understanding of their own point-of-sale data, retailers were supplementing consumer understanding with shopping patterns and behaviours.

They were using this to selectively target various shopping experiences across their locations and store formats.

“They are then activating strategies around price, promotions, range and space.”…..

BusinessLive.co.za: Read the full article

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