Less Products More Buys

The Discounters – Blitzkrieg Retailing
October 17, 2014 Omnibus

It’s spreading fast. From Germany to Australia. Not missing tiny Slovenia. Of course, we’re talking about the blitzkrieg invasion of the retail (and real!) territory by discounters. And as described in my previous post, there is something in their offer that strongly connects to the new customer who is a) overburdened with information, b) paralyzed with too much choice of the products that are too similar, c) tired of strategies that retailers use to flatten the wallets of the customers.

So, what’s the difference in the discounters appeal to customers? Let’s examine it directly – by shopping, of course.

Firstly, we’ll have to park a car on the huge asphalted area, just outside the rectangular box of a regular size around 1250 square meters.

The quick glance over the parked cars brings us to the following points:

#1: Customers. English say that in front of Aldi’s Jaguars and Skodas nestle side by side. In Slovenia, it’s more like family Citroens mixed with Hyundays/Kias. Plus occasional BMW.

And now bring the obligatory coin out of your pocket. No coin? Sorry, no coin, no discount shopping! After we put the coin in the slot and the trolley is safely in our hands, we can enter the store which leads us to the

#2: Mass appeal. Student couples rub their shoulders with construction workers. Who are escorted by upper-class women buying organic food. No, Aldi aka Hofer is no place for elitism!

Let’s continue our drive around the straight aisles with other points:

#3: Choice. Choosing between 2000 items is far easier than between 30000+. After all, does anyone really need 22 different varieties of parmesan cheese or 40 flavors of marmalade?

#4: Loyalty. It’s loyalty of the retailer to the customer that matters and not the other way around. So the discounters can – somehow boldly – make advertisements based on jokes about loyalty cards.

#5: Quality. Perhaps some of the visitors are really only seeking whatever cola for 35 cents, but the majority of the others are into something else. Shall we call it »value for money« or just go one step ahead and accept it as a straight FMCG quality? Discounters have succeeded to convince customers that they are guaranteeing the quality of all the products inside the store. A short formula goes like that: one discounter – one quality control – many, but not too many!, products.

Out of #5 comes

point #6: Private labels as regular brands. Only the top national brands have found their way on shelves (estimation: less than 10% of all items). The rest is private labels such as Cucina nobile, Milfina, Natur aktiv, Lomee, Berg Koenig. Perhaps a bit confusing for professors of marketing who want to remark something about brand equity, intangible assets, etc., but fully acceptable to the new customers who never knew what was really inside the box of those branded cereals. Once again: in discounters, you don’t have to think who vouches for the contents! One name behind it all!

#7: Details. In most cases less is more – says the basic philosophy of discounters. But sometimes a little bit of more is much more. Just take a look at the fresh bread labels, where we can find all the information about flour types. Are traditional retailers offering something like that?

#8: Music. This one is for quiet intermezzo. No in-store music or radio playing.

#9: Offer matters. The typical discounter shop is quite a mess. Visual merchandising almost unknown discipline! But as it is, it kind of consciously communicates: no, you won’t have to pay for fancy displays. No frills, no nonsense. Come on, it’s only a box of pasta or a can of pet food. Oh, yes, and it is also a yummy chocolate from private chocolatier with more than 100 years of tradition.

Now we are nearing the end, coming to the checkouts where we find a very, very long conveyor belt but a very, very short end shelf which brings us to the

point #10: System.

The long belts and short shelves – no coincidence, all is calculated. The place for the shopping cart is also marked (see: the picture on the left). Just one more detail that shows how robust and efficient this selling & money-making machine of discounters is.

At this point we could – with this image of a trolley – start a discussion of how customer experience is “built into the offer”, but that’s something for another occasion. Next shopper is waiting and we have to get the coin back from the slot.

But before we exit the parking lot, we’ll just try to answer one more question: Are the 10 points above something that should scare the traditional retailers? Answer: Yes. But only, if they are not willing to either a) accept them as necessary standards or b) thoroughly differentiate on them.



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