Answer To: As part of your individual assignment, you are required to develop a report based on the following...
Soumi answered on Sep 19 2020
THE FUTURE OF THE RETAIL STORE – WHAT DOES ONLINE MEAN FOR BRICKS AND MORTAR?
[A STUDY ON ALDI]
Table of Contents
Introduction 3
Present Operation of Aldi Australia 3
Internet Technologies used by Aldi Australia 4
Recommendations 5
Conclusion 6
References 7
Introduction
The retail industry in Australia is facing huge disruption as being faced by conventional retail chains all over the world. The rapid influx on online e-commerce channel of retail in almost all product categories has forced traditional retailers to adapt to the changing business scenario and many upcoming small, medium and large-scale retail stores to shut down. The Australian retail industry generates close to $ 311 billion in annual sales with over 30% industry wise annual growth percentage. It provides direct and indirect employment to more than 1.3 million people across various parts of Australia (Business Insider Australia, 2018).
Along with multinational retailers are pressurising local businesses with advanced business practices this disruption is majorly caused by the changing consumer buying behaviour. Consumer has become more tech savvy, cosmopolitan and wants constant enhancement in the user experience. When online is changing the way customers purchase goods, it provides the traditional retail players to encash upon the user experience and entertainment aspect associated with them. The future lies with the players who show agility in their business practices, a well formulated Omni channel approach and changes in the consumer household fundamental economies and buying patterns across multiple product categories (KPMG, 2018).
Present Operation of Aldi Australia
Aldi, a German supermarket chain entered the Australian market in the year 2001 with its first store in Sydney. Aldi was the first retailer in Germany in the early 60s to bring the widely used concept of “self-service”, which enhanced user experience to a new level. Today Aldi has around 500 stores in all of the Australian continent and boasts of close to 13.5% of the Supermarket industry share. With its low cost, high quality strategy, Aldi rise in market share has risen at the cost of several small, independent supermarkets. However, the bigger ones such as Coles and Woolworths, which together hold around two thirds of the supermarket industry, responded through strategic price cuts thus taking on their bottom line but at the same time increasing their share of private label brands as well (News.com.au, 2018).
As stated by Moatti et al. (2015), with the ever-changing consumer mindset, increasing customer loyalty through adaptive and agile business practices and marketing mix is the key to success in the supermarket retail industry. The company has built its business in the Austrian continent by adapting the strategy of pre-selected but limited product lines mostly comprising of the private labels. This served several advantages including low warehousing costs, better store footprints and better relations and control over the suppliers. Aldi has formulated its Marketing mix for the Australian market right from the start with the objective of making its customers shop regularly at the promise of low prices coupled with high quality. Therefore, its marketing mix has been a blend of providing brands, which are at par in quality with the famous brands in different product categories, adapting a competitive pricing technique to tackle the competition, expanding rapidly in terms of number of stores and product categories along with a combination of above the line and below the line marketing activities.
As mentioned by Wei et al. (2018), in a market flooded with retail chains possessing all capabilities, adapting the right pricing strategy becomes key to successful retail operations. Among several of them commonly used, Aldi has resorted to Competitive pricing by charging slightly below than its competitors. It manages to do this by making use of the economies of scale while purchasing huge quantities from its suppliers and thus granting them negotiation power for best possible prices, which is then passed on as it is to the customers. In addition to this, Aldi has gradually expanded its footprint in terms of number of stores in accordance with the size and demographics of the...