Supermarket shoppers pay to look at 20 different lines but they only buy one, says Paul Foley, who heads Aldi in the UK. Unlike the big four grocers, his approach is to stock only one type of baked bean. By doing so he can deliver better quality at a lower price. Aldi delivers two benefits to its shoppers, says Foley. First, they save time as they do not have to select products from displays cluttered with brands they don't want. Second, they understand the value proposition and are not taken in by the "cheapest-on-display" measures used by his competitors. Thrifty shoppers from all income levels are visiting Aldi, he says. When the recession is over, they may stay. However, thrifty shoppers from all income levels have always been looking for a bargain. In the 1970s my mother ganged up with her friends and took it in turns to shop at the wholesale markets for fruit and vegetables, meat and fish. The bigger obstacle to the Aldi approach may be that it is impossible to get the one product right for all people. While shoppers may like their beans, they may not like their pasta? The proposition of one-size-fits-all is easy to understand and difficult to execute. Nimble independent retailers should be able to find a way to compete.
“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...
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