Diversity in retailing by Shanna Bank, Lucie Pospísilová, Jana Nováková, Julia Maurer
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Diversity in retailing by Shanna Bank, Lucie Pospísilová, Jana Nováková, Julia Maurer
- 1. + Diversity in European Retailing 08.12.2014 By Jana Nováková, Shanna Bank, Lucie Pospíšilová, Julia Maurer
- 2. + Agenda Case introduction Food retailing industry Snapshot ALDI ALDI in Romania ALDI in the UK Internationalization strategy CountryLife Snapshot Business model Recommended internationalization strategy Adaption vs. standardization zones 2 Diversity in European Retailing 08.12.2014
- 3. + Case 3 introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Food Retailing Industry Customized models for each community Create unique shopping experience Differentiation from competitors necessary Staff, technology, services, advertising etc. Positioning i.e. ALDI target customers who want to save money BUT also offers private labels 120 100 80 60 40 20 0 Retail revenue 2012 (US$bn) Diversity in European Retailing 08.12.2014
- 4. + Case 4 introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Snapshot ALDI 9,600 stores in 18 countries (2013) Albrecht Discount ALDI World‘s largest operator in discount channel Revenue €75 billion worldwide (2013) Limited assortment, focused on most needed and most often used products In-store costs kept at minimum „We buy the best for less, so you can too...“ https://www.youtube.com/watch?v=8 sf8NiJPWzY Diversity in European Retailing 08.12.2014
- 5. + ALDI in Romania Was it a good idea of ALDI to enter Romania? Market entry learnings transferred from the UK to Romania Recommendations for local adaptions to taste and shopping habits Evalutaion of ALDI‘s approach to enter the Romanian market Diversity in European Retailing 08.12.2014
- 6. + Case 6 introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Was it a good idea of ALDI to enter Romania? 07.2007: First market entry by 100% subsidiary in Bucharest controlled by Austrian based subsidiary Hofer Yes... Wave of Eastern European store openings: Slovenia (2005), Hungary (2007), Poland (2008) No competition of local discounters Lidl&Plus started its aggressive expansion towards CEE Sales growth decreased from 2000-2004 for Aldi Romania in EU since 2007 Financial crisis started in 2008, good possibility for „hard-discounters“ In CEE: Romania is the largest country , #2 in terms of population size, Bucharest is biggest city Diversity in European Retailing 08.12.2014
- 7. + Case 7 introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Was it a good idea of ALDI to enter Romania? 07.2007: First market entry by 100% subsidiary in Bucharest controlled by Austrian based subsidiary Hofer ...and No Low GDP per capita and shrinking population High property prices ALDI as a „laggard“ and less aggressive Diversity in European Retailing 08.12.2014
- 8. + Case 8 introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Was it a good idea of ALDI to enter Romania? 1995 Mega Image Delhaize Group 1999 Billa REWE Group 2001 Carrefour Carrefour Group 2005 Penny Markt REWE Group 2006 Auchan Mulliez Group 2011 Lidl Schwarz Gruppe 1995 2011 2005 Plus ALDI is a “laggard” and less aggressive Schwarz Gruppe Tengelmann Group 1996 Metro Metro AG 2000 Profi Delhaize Group 2001 Penny Markt XXL / Selgros REWE Group 2005 Kaufland 2006 Real Metro AG Diversity in European Retailing 08.12.2014
- 9. + Case 9 introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Market entry learnings transferred from the UK to Romania Repositioning plan (2005): Investment £1.5 billion 50 new stores annually over next 4/5 years Product range expanded 700 1050 products Advertisement: TV add “Spend a Little, Live a Lot” Incredible quality and unbeatable value Result: > 3% of British grocery market 7th out of 96 retailers in the UK’s biggest survey of high street shops Diversity in European Retailing 08.12.2014
- 10. + 10 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Romania: Local tastes and shopping habits Store size/type: Proximity stores with smaller area Low prices, very price sensitive Assortment: Local suppliers preferred Private labels appreciated Local adaption “Natural”, home made-like products Mămăligă Compot Plăcintă Local wine Diversity in European Retailing 08.12.2014
- 11. + ALDI in the UK ALDI‘s shift from glocal to multinational strategy: The right decision? How ALDI was repositioned in the UK Diversity in European Retailing 08.12.2014
- 12. + 12 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Internationalization approach Think global, act local Economies of scale Glocal Orientation Standardization Logistics Global Orientation Layout Logistics Pricing Adaptation Homogenous markets Unified Etnocentric Moderate adaptation Diverse formats Positioning Domestic Market Orientation Multinational Orientation Benefits from Integration New brands Local Responsiveness Pricing Heterogenous markets Pricing Diversity in European Retailing 08.12.2014
- 13. + 13 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy From Glocal to Multinational Aldi’s Business Model Low rent Stacked on pallets, in boxes Layout suits logistics Limited assortment Low-cost media Newsletter „Aldi informs“ Aldi in the UK City center, eco-friendly Fresh, Grab-and-go food Easy layout, lower shelves Premium private brands Professional publicity agency Online press center Diversity in European Retailing 08.12.2014
- 14. + 14 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Internationalization strategy change Occuring problems: Loss of unified company image Mode different products, different store image, different target customer Diversity in European Retailing 08.12.2014
- 15. + 15 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Internationalization strategy change Occuring problems: More complicated supply chain More products (700 1050) and more different types (healthy, cosmetics, ready-to-eat) Higher costs Several marketing campaigns in the UK and redesign of stores Diversity in European Retailing 08.12.2014
- 16. + Discussion time ALDI‘s shift from glocal to multinational strategy: What do you think? The right decision? Diversity in European Retailing 08.12.2014
- 17. + Internationalization strategy Snapshot CountryLife Business Model Recommended Internationalization Strategy Adaption vs. standardization zones How the Czech food retailer CountryLife should venture abroad Diversity in European Retailing 08.12.2014
- 18. + 18 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Snapshot CountryLife Founded 1991 in Prague, first bio groceries store in CZE by Otakar Jiranek Eco-center, Eco-farm, Bio-bakery No. 1 importer of bio-products – more than 2000 in portfolio Groceries Fruits and vegetables Pastry Cosmetics Detergents 4 stores in Prague More than 150 employees Introducing bio-groceries to schools Diversity in European Retailing 08.12.2014
- 19. + 19 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Business Model To inspire people with balanced and socially responsible lifestyle. NEWSTART concept Covering the whole food chain Ecological responsibility Mission Target group Core business Differentiation from the competition Diversity in European Retailing 08.12.2014
- 20. + 20 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Recommended internationalization strategy Health consciousness (9. healthiest country) Vienna Geographical proximity Income Cultural similarity Diversity in European Retailing 08.12.2014
- 21. + 21 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Internationalization approach Pricing: higher Think global, act local Glocal Orientation Global Orientation Layout: similar style Moderate adaptation: language, assortment Domestic Market Orientation Multinational Orientation Benefits from Integration Local Responsiveness Diversity in European Retailing 08.12.2014
- 22. + 22 Case introduction ALDI in Romania ALDI in the UK Interna-tionalization Strategy Standardization vs. adaption zones Diversity in European Retailing 08.12.2014
- 23. + Thanks for your attention Q&A Diversity in European Retailing 08.12.2014
- 24. + Backup Diversity in European Retailing 08.12.2014
- 25. + References http://www.foodanddrinkeurope.com/Retail/Falling-domestic-sales-force-Aldi-into-Eastern- Europe?utm_source=copyright&utm_medium=OnSite&utm_campaign=copyright http://www.fruitnet.com/eurofruit/article/9656/lidl-branches-out-in-eastern-europe http://en.wikipedia.org/wiki/List_of_supermarket_chains_in_Romania http://fructidor.com/newsdetail.aspx?idn=13412 http://www.techbusiness.me/files/aldivslidl.pdf http://hbr.org/2009/12/dont-be-undersold/ar/1 http://www.wall-street.ro/articol/Companii/31941/Meciul-dintre-discounterii-Aldi-si-Lidl-se-muta-in-arena-romaneasca. html http://mpra.ub.uni-muenchen.de/40361/1/25-The_economic_crisis_an_opportunity_for_retailers_in_Romania.pdf http://www.countrylife.cz/ http://www.forbes.com/2008/04/07/health-world-countries-forbeslife-cx_avd_0408health_slide_16.html http://www.eufic.org/article/en/expid/Fruit-vegetable-consumption-Europe/ http://www.oecdbetterlifeindex.org/countries/hungary/ 25 Diversity in European Retailing 08.12.2014
Editor's Notes
- Jana Tesco PLC 101268 Carrefour S.A. 98757 Schwarz UnternehmensTreuhand KG 87236 (Lidl+Kaufland) Metro AG 85832 Aldi 73035
- Jana Europe: Aldi (Poland, France, Denmark, Netherlands, Belgium, Luxemburg, Spain) Aldi süd (UK, Ireland, Switzerland, Austria, Hungary, Slovenia + Australia, US)
- Julia http://thediplomat.ro/print2.php?id=170 No domestic competition: After the Iron curtain, not enoughg time for doestic players to develop, foreign investors were much faster Slovenia: highest income per head in the region and EU member by 2007 Lidl: with planned investments of 150mEuro in Romania until 2011 and has Plus: 2005 announced to invest 300mEuro in 2006 into CEE Today: Lidl has 170 stores in Romania, since it also acquired Plus, owned by the Tengelmann Group. This acquisition included all activities of Plus in Romania (96 stores) and Bulgaria (23 stores).
- Julia No domestic competition: After the Iron curtain, not enoughg time for domestic players to develop, foreign investors were much faster Slovenia: highest income per head in the region and EU member by 2007 Lidl: with planned investments of 150mEuro in Romania until 2011 and has Plus: 2005 announced to invest 300mEuro in 2006 into CEE
- http://en.wikipedia.org/wiki/List_of_supermarket_chains_in_Romania#List_of_supermarkets_in_Romania_2 http://www.regiodata.eu/en/lidl-becoming-second-largest-food-retailer-romania 2005: followed by Penny, Kaufland and Plus Today, Delahize Group with „Profi“ is the biggest supermarket chain in Romania
- Jana At first Brits covering shopping bags 2% market share during the 90s and 00s 2005 Repositioning plan: 50 new stores annually over next 4/5 years Targeting affluent consumers Investment 1.5 billion pounds “Don’t change your lifestyle, change your supermarket Incredible quality and unbeatable value Product range expanded 700 -> 1050 products Redesigned product packaging TV add “Spend a Little, Live a Lot” Online Press center Extension or refurbishment of stores in UK Eco-store – roof with plants >3% of British grocery market Aldi 7th out of 96 retailers in the UK’s biggest survey of high street shops
- thesis: http://mpra.ub.uni-muenchen.de/40361/1/25-The_economic_crisis_an_opportunity_for_retailers_in_Romania.pdfhttp://www.unicarm.ro/en/index2.php?page=conserveproduse&f=conserveproduse&m=conserve Interview with Romanian: first product that comes to mind is called mamaliga, it's similar to Italian polenta. It's a type of corn meal that they make into a moist cake like texture they eat. 2)Timesoreana and Ursus are the beers that come to my mind, also they love this type of juice called compot, which is fruit that has been boiled and they drink the extract juice from the boiling process. Interesting enough, not to many people tap into the retail market with this. It's usually made at home. one of there special dishes, and one of my favorites is Semale, which is rice and meat rapped in cabbage or wine leaves. Big shopping centers are in the cities and usually they have smaller outlets in the towns... villages have local stores called magazines... magazines are everywhere but less in the city and a little more frequent in the towns. I don't recall any big supermarkets in the suburbs, only outlets from them. In the cities, people are definitely into foreign products and is popular especially with the young generation. In the small towns and villages it is less... They are into home made stuff of their own... and believe that local is "natural." I would brand food items as "natural, fara chemical" ... without chemicals. How many times I heard that coming out of people... They also are into bland food... they think to many spices is unhealthy, and not natural. OHHH and they love this food called plecenta, which is a type of dinner pie either baked or fried with either cabbage, cheese, potato, pumpkin or meat. They all go to the stores whether privileged or not, however they are price sensitive. As for a product that would sell... I don't ever recall seeing canned Zeama (very popular soup, kind of like chicken noodle soup) or Bors (a type of vegetable soup... but that is moldova... not sure Romania.. I remember my Moldovan friends constantly asking for teeth whitening strips because they didn't exist in moldova, not sure about Romania... also Bick lighters don't exist in Moldova... I'll ask my friend in Romania, if he can think of a type of product he would sell in Romania... they also are a tea drinking culture, and instant coffee and the wine section should be bigger than the beer section
- Shanna: make it more tangible/photos/pictures/smartart
- Aldi has rapidly grown in the UK which experts mostly attribute to the credit crunch. This growth stopped in 2009 leading to the conclusion that Aldi might have wondered too far away from its discounts roots.
- Jana Active in Humanitarian Aid Organisations - Adra http://www.countrylife.cz/data/files/novy-profit-10-2010-ts-cl-115.pdf
- 9. Austria http://www.forbes.com/2008/04/07/health-world-countries-forbeslife-cx_avd_0408health_slide_16.html http://www.eufic.org/article/en/expid/Fruit-vegetable-consumption-Europe/ http://www.oecdbetterlifeindex.org/countries/hungary/ In Austria, the average household net-adjusted disposable income per capita is 29 256 USD a year In Hungary, the average household net-adjusted disposable income per capita is 15 240 USD a year In the Slovak Republic, the average household net-adjusted disposable income per capita is 17 228 USD a year
- Here comes question no 2: in which aread do you recommend the adaption for Country Life in Vienna? Special POD: Assortment: open vegetable/fruit bar -> picking fruits from a farmers market Layout: country style Services: special Bio e shop, ecological but not outdated! Local adaption in the assortment. The assortment in CountryLife is unique and followes the customer aspiration of being a healthy person.The same target group can be found in Vienna. Though, so the assortment strategy should be maintained, though we should adapt some minor items based on the shopping preferences of Austrian people, local products from Austria: important bakery items (Cakes &Apple strudel), local wine Price: Income level is Vienna is significantlyl higher than in Prague, so prices can be raised. People in Vienna are more willing to pay premium for health conscious food. Advertising activities need to be adjusted: Language, more advertising since the brand name is not known. Not reveal the COO Czech Republic. Could bring disadvantages in brand perception. Positive that English brand name, but also online shp needs to be adjusted