Food discounters

Food Discounters
Georgina Cameron, Michelle Garcia,
Vicki Pereira, Jane McKenna and
Madeleine Frid
What are Food Discounters?
Stores which sell foods at reduced prices.
They cut costs by having small numbers
of staff, minimal technology and few
named brand goods.
Major Stakeholders
4
Main stakeholders:
• Aldi
• Netto
• Lidl
• Kwik Save
Historical developments
 Originated
in europe
 Aldi was the first - opened in Germany
in 1948
 Introduced into Britain in the 1990s
 1993 - Tesco and Sainsburys introduced
their budget ranges
“the multiples have cut off the discounters
life blood”
Economic Status
 Growth
in food discounters is higher
than that for the UK retail industry as a
whole
 Less than 1% of total retail industry
 Represents 10% of grocery market
 Estimated £1.49bn in 2000
Supermarketing, April 14 1995
Economic Status
 How
do discounters make their money?
• Concentrating on own label products
• Buy stock at lowest possible prices - sold
at low prices
• Few staff - low wage costs
• Smaller stores
• Little advertising - In 2001 Aldi spent just
£3.2 million on advertising. Tesco spent
£1.1 million on Value range alone
SWOT analysis
S tre n g th s
 D isc o u n tin g h e rita g e
 C e n tra lise d fu n c tio n s
 L o g is tics k n o w -h o w
 P riva te C o m p a n y
W e a k n e ss e s
 N o t d e ve lo p e d a s q u ic k ly a s
w o u ld h a ve lik e d
O p p o rtu n itie s
 O w n la b e l d e ve lo p m e n t
 O n e o ff n o n -fo o d ite m s *
 In te rn a tio n a lis m
 D e c lin e o f K w ik S a ve
T h re a t
 M u ltip le s ’ va lu e lin e s
 L a ck o f s u ita b le n e w s ite s
 C o m p e titive U K e n viro n m e n t
 C o n tin u e d g lo b a lis a tio n
* Aldi only
IGD research
Current Trends
 Aldi
dominates German discounters
 Aldi now have 250 UK stores
 In February 2001 Aldi opened their first
store in Australia
 Aldi had invested $A 472.9 million in
Australia by the end of 2001
 Early in 2001 Aldi and Lidl bid for
Iceland
Infotrak
Innovation
“An idea, service, product or
piece of technology that has been
developed and marketed to customers
who perceive it as something novel and
new”
 Innovation:
Kotler and Armstrong, Marketing in Practice
Innovation
 Back
to basics
 Store
layout
 Low
price strategies
 Just
in Time stock control
Growth Potential
 Aldi
and Lidl’s Current business
strategy:
E xis tin g
E xis tin g P e n e tra tio n
 D e e p p ric e c u ts
 In c re a se d p ro d u c t
ra n g e
N ew
M a rk e t e xte n s io n
 In te rn a tio n a lisa tio n
N ew
P ro d u c t D e ve lo p m e n t
 O w n Label
D e ve lo p m e n t
 O n e o ff n o n -fo o d
ite m s
D ive rs ific a tio n
 N one
IGD research
Growth Potential
Aldi Stores in the UK
Year
1995
1996
1997
1998
1999
No of
s to re s
137
163
198
210*
235
* Estimate
Lidl stores in the UK
Year
1994
1995
1996
1997
1998
1999
N o. of
S to re s
15
52
110
126
145
201
A.C Nielson/IGD research
Future Prospects
 Expanding
into more countries
 Supermarkets are responding by
lowering prices
 “the biggest threats to discounters are
each other…. It is predicted that only
Kwik Save and Aldi will be the primary
survivors”
Reed Elsevier Business Publishing Ltd 1995
Future Prospects
Are customers more interested
in price or quality??