Grocery Retail delivered zero growth in2015, according to Kantar.  Most industry commentators predict continued low or even no growth in our market.  The Big 4 accept or imply that share growth will be tough to get.  We hear of Branded companies reluctant to take bold, optimistic Category Strategies to Retailers, for fear of being thought “pie in the sky”.  Optimism and even ambition can feel out of fashion.

It is surely true that what human beings set out to achieve, has a strong bearing on what they actually achieve.  So it is worth asking if we as an industry are talking ourselves into an unnecessarily tough future.  The economy has by and large improved and many consumers have a bit more money to spend.  So why wouldn’t we challenge ourselves to take a share of this growth?

Of course the game changing dynamic has been the rise of Aldi and Lidl, with their improved offer, reputation and geographical reach.  This has triggered a focussed response from the Big 4 and beyond, which everyone agrees is necessary.  If a product isn’t better, then why should it cost more?

The necessary price reductions will often bring decline in value sales for the specific lines, and sometimes for their categories too, in the short term at least.  But it is the right thing to do.

But does the Discounter dynamic have to mean no market growth?  Or, put more positively, how do we as an industry go about getting decent growth in 2016 and beyond, given the current landscape?

We think there are three things.

First, we need a steady stream of a few, big innovations that justify a price premium.  Kantar analysis shows that many product innovations don’t deliver category growth, but that the best predictor of those that do, is a price premium vs the category average.  To justify a premium, the consumer needs to experience a clear and valuable benefit.  This might be health, ease, speed, taste, beauty or fashion – whatever the consumer will pay for.  The supermarket is full of examples of innovations that have driven growth.  Where would the detergents category be now, if we had all accepted thirty years ago that “washing powder is just washing powder – a commodity”?  Look at what has been achieved in rice (microwaveable) and porridge (sachets, pots).

Second, we need to spotlight the products and categories that justify a premium.  This is about getting products in the right place in store, and in aisle, and attracting shopper attention to the proposition, via pack and Point Of Sale.  It isn’t about hiding the cheaper products, but is about giving the very best chance to products with differentiation and premium.   The effects on mix and therefore sales and profit can be significant.

Thirdly, we have to protect the selling price on those products that justify a premium.  Consumers will pay more for a better product.  But they won’t happily pay more than they paid for the same product last week, when it was on deal.  We have to be careful that to spotlight great products, we don’t go the easy route of major price promotions.  If we do, we will set an anchor price in the shopper’s mind, which sticks.  Promotions with purpose are good – but the purpose should be long term Brand, Category and Retailer growth, not a win today storing up a loss in the future.

The danger is that in focussing on the Discounter dynamic, we forget the equally important business of creating and selling products that are worth a bit extra to consumers.  There’s no reason why we can’t do both things.  But if we set out in the belief that our markets are not going to grow much then guess what?  They probably won’t grow much.

Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG companies.  He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.