Review on
“No frills supermarket Aldi to accept credit cards”
(By cnbc.com)
According to one of the latest CNBC news, German-based supermarket chain Aldi, which is focused on no-frills service, will start to accept credits cards on U.S. market. The Aldi chain consists of more than 1,500 locations in the USA and tries to use the aggressive strategy of development. According to the company’s plans, the aim of this strategy is to increase the number of supermarkets to 2,000 by 2018.
One of the most important parts of this strategy is to increase the level of service. The main competitive advantage of Aldi (compressing to Wal-Mart or Target) was focus on lower prices (due to cost-cuttings). For example, costs were reduced by limited assortment, or by lower labor costs (all products were stocked in boxes on shelves). But in the result, a company has understood that focusing on low prices is not very effective decision on the highly competitive market. So, the CEO Board decided to refocus its strategy on service. Allowance of credit cards (it is possible to use only cash or debit cards in Aldi markets for now) is not the first (and last) change in Aldi’s transformation. They have already increased the quality of packaging and, in addition, added healthier food on checkouts.
All these operational decisions are the result of changes in marketing strategy. US retail market is highly competitive and you cannot reach the success of it with low prices that are based only on costs-cutting. It will be a real competitive advantage only if your prices will be lower with the same level of costumers’ comfort (due to better operational performance or better suppliers’ relationship).
All in all, pricing strategy should be based on the real need of the customer and you should make really deep market analysis in order to use pricing as your competitive advantage.
REFERENCES
n.p. “No frills supermarket Aldi to accept credit cards”. cnbc. 2 March 2016. Web. 7 March 2016
