Shoprite takes the price plunge

Personally, I think Shoprite is way ahead of its competitors and just about every other retailer, with TV ads showing their trucks at the fuel pumps and claiming that the R27million it's going to save on fuel for its 400-strong delivery fleet will go straight into its customers' pockets.

Powerful message

Its TV commercial isn't something that will win anything at the Loeries, but it is stunningly simple and puts out a powerful message.

And given that in tough economic times the first thing any marketer should do is go back to basics, retailers should really be forgetting about "big ideas" and trying to convince consumers that "they care" but rather trying to fathom just what it is, at this particular moment, consumers actually want to hear from them.

I think it is fair to say that what consumers are desperately wanting to hear is that, like the fuel price, product prices will be coming down. Consumers are not stupid and they know that when the price of fuel goes up, product prices are jacked up almost within nanoseconds.

So, when retailers mumble on about "wanting to see what trends develop in the economy before lowering prices," there are not many consumers who believe them.

As I mentioned in my weekly Bizcommunity.com column late last year, the reason that there has been so much corporate reluctance to follow the plummeting oil price with announcements of cuts in the prices of products and services is twofold. Firstly, they were probably nervous last year about the unpredictable oil price and wild fluctuation in the value of the rand - believing then that oil could shoot up as fast as it went down and the rand could take a nasty nose dive as it has done in the past.

Still apathetic?

Or, the second reason is that corporate bean counters can usually blind marketers with all sorts of complex reasons that prices should not come down. There is probably a third reason, too, and that is simply to keep quiet and hope that SA's apathetic consumers won't notice.

But now, enough time has gone past for retailers to realise that the odds are against the oil price screaming upwards all of a sudden. And frankly, even if it did, they are really very, very good at adjusting their prices upward at a moment's notice.

It seems that Shoprite is the only retailer to have realised that the whole whole point behind announcing a price cut right now has got nothing to do with reality or what is going to happen tomorrow, but everything to do with taking advantage of current public perception and scoring a bucket load of long-term brownie points. And getting some real long-term returns on marketing investment.

Moral high ground

I have no idea how long Shoprite intends running its current TV campaign but right now it is holding the moral high ground and, having gone this far, it world make sense for it to leverage off its TV campaign and push its point across all media and in store until such time as its competitors wake up.

I get the impression that SA's retailer industry and its suppliers are living in the past and waiting for the global economic tsunami to hit our shores before taking any action. Which, when it inevitably happens, might just be too late for a lot of them.

Marketing, after all, is about looking ahead and eliminating nasty surprises.

Of course, Shoprite has been very clever by concentrating on its delivery fleet savings for its source of price reduction. Seems to me that its suppliers haven't exactly fallen over themselves cutting their prices, even though they must be saving a bundle on their own fuel costs.

The Shoprite people have not only scored brownie points for themselves but when you think about it, they have thrown down the gauntlet to just about every other South African company with a fleet of delivery vehicles. Especially those sporting their corporate branding that will most certainly have motorists wondering just how much they are saving on fuel and not passing on to their customers.