Lidl

ALDI has been able to tap a niche in the market that is more appealing to small stores, do not care much about the brand of a product but more to the economic benefit by buying the product in a more economical way.

However, when Franklins unsuccessfully attempted to reconfigure their position in regards to their consumers, they lost their hold on the market (Armstrong et al. 2012). It is also outlined by Armstrong et al (2012) that the inexperience of Franklins in regards to market segmentation resulted in the loss of existing consumers as well as future consumers, and ultimately resulted in an uncontested response to ALDI. 4. ALDI’s Private label strategy Smith (2006, p. 39) implies that due to the nature of the supermarket industry, stores that offer a larger range of products are often more efficient than those that offer fewer items. ALDI however tests this notion, as they stock roughly 700 private label products - which is less than other retailers who stock 25000 to 30000 products (Bonn 2006, p. 1), yet they are still able to secure their market position and contend with rival retailers (Armstrong et al. 2012) 4.1 Perception of Private Label Within the last 20-30 years, private label brands were initially targeted towards the lower classes; therefore people’s adoptions of private label brands were not very common (Kumar & Steenkamp 2007, p. 12). However, in recent decades private label products have become more favorable to Australian consumers. This is evident in 2010 Nielson Global Survey (The Nielsen Company 2010) as the total percentage of sales of private label products have increased

Stores are also competing in other forms in order to secure loyal customers. Some of the forms are product range and quality by which stores are offering privately-labeled products that are primarily used in the commodity lines at lower prices.(Australian Government, Department of Agriculture) This has caused a significant shift in the industry, thus allowing players like ALDI who started with a private labeled product early on to gain and improve its market share. Another major form is convenience where several non-price factors such as opening hours, strategic locations, parking area, distribution options (delivery or in-store pickup) and online shopping comes into play. (Australian Government, Department of Agriculture)

For Target to have their own private and designer label like Mizrahi and Missimo for apparel, Calphalon for cookware, Philippe Starck for seating products, and Sonia Kashuk for Cosmetics are strong holds. These private labels make Target a stronger company and shows how they are still working towards great quality products. Target also expanded its internal product development unit, which developed relationships with external vendors, some of which simply supplied Target with goods, other who collaborated with Target design and product development. Later on Target also developed their own private label of grocery products to earn higher margins and have greater control over product development. These strong holds make Target move attractive and show the dedication that the company wants to grow.

This left a segment open for new entrants to come with no competition from incumbents.  Private labels also did not do product proliferation and were focused on limited popular brands at low costs. This helped them save costs in R&D of new products and also save costs by not experimenting new products. They did not compete with the Big 3 on all possible niches. Also, from the table below, we see that the total costs of the private label are 40% less than the Big 3 brands, which helped them to target the price sensitive customers. They are several strategies that the private labels applied which resulted in reduced cost structure. First of all, they did not use coupons, which had accounted for 23% of the total costs for Big 3 brands. The private label also offered higher margins to retailers (15%) in comparison to Big 3(12%) in order to get premium shelf space and signage. The private labels reduced packaging costs by supplying cereals in clear plastic bags. They also used less labor intensive manufacturing process and fewer expensive fruits and nuts.

Australia’s food market engrossed with work gives a high premium for convenience that gave rise to complete service stores, which is the operating format of the two national stores Woolworths and Coles-Meyer. However, this also gave way to the importance of value for price, resulting to the immediate uptake of high quality and low priced strategy of Aldi stores in Australia. On one hand, the Australian market demands both complete service and low prices for quality products as sources of value. Aldi has the second source of value and is constantly working to provide all that most customers need in a retail store. Although, the national and regional retail stores have complete service even collaborating with gas companies to establish stores in gas stations.

The second force that I will use to analyze the Trader Joe’s company is the “the rivalry among established competitors”. Factors to consider when looking at the rivalries in the industry are industry demand, cost conditions, and exit barriers. Trader Joe’s competitors include The Kroger Co., Whole Foods Market, and Safewat Inc., and all super markets in general (Llopis, 2011). With that said, there seems to be a high demand for what Trader Joe’s offers, private labels. This means that the intensity in the industry is less compared to an industry with a flat demand. Trader Joe’s does not have to fight hard to sell their products because of the service they have created. Trader Joe’s brand can be considered “diversity on steroids” which has somewhat of a cult following among consumers (Llopis, 2011). Consumers that want unique experiences with their food are able to do exactly that at

When Loblaw introduced President’s Choice (PC) private label it was a rare resource that granted them temporary competitive advantage in the food retail market. It is a rare resource; but why is it only temporary. It’s a strong brand. Loblaw’s President’s Choice private label itself could not confer any advantage for the company if it was not organized to capture the value from them. Loblaw’s senior management team that averages 18 years of experience has created systems, processes, policies, organizational structure, and culture to be able to fully realize the potential of the President’s Choice brand. Good Incentivized by stock options senior management not only pays top wages and benefits to all employees to create a great working culture, they continued to utilize the competitive advantage the President’s Choice brand to increase customer loyalty. President's Choice Financial program provides Loblaw’s consumers with financial services, such as everyday banking, loan, and investments. Also, they developed brand loyalty through a redemption points system, where consumers could trade their loyalty points for free groceries. These added values are what will keep Loblaw’s strategy a differentiator.

The company has also made steps towards moving closer to an energy self-efficiency. By opening the “industry’s first LEED-certified wine tasting and office facility,” using recyclables, the company has been able to again lower cost. Lastly, the companies’ desirable employee benefits for immigrant laborers have also play a huge role of their company culture.

The company revenue can be spent to purchase sustainable plant and equipment. Installation of equipment means better atmospheric appeal for stores.

The retailers are motivated to promote private label goods because of their lower costs and greater profit margins.

In the world today, companies are working hard to change the way that they run their businesses. Out of various different companies and business, one company that seemed to have a great deal of consideration towards social responsibility was Aldi. The purpose of this paper is to describe what corporate social responsibility is, the history of Aldi, and the approach Aldi takes towards sustainability and how they are a sustainable business. Also, what their future goals are, achievements they have made, and how they plan to invest in new technology to further their corporate social responsibility.

The Big 3 had high advertising to sales ratios of 10-14%, also deterring entry, because average first year advertising cost for a new brand was over $20 million. We can conclude that total costs related to producing private label products are lower than new branded products. Private label products can offer greater margins to grocers and still sell at lower prices. They have a considerable competitive cost advantage over the new branded products.

The customers who prefer the private label over the national brand give more importance to factors like prices, important features which differentiate them from the national brands, good after sales services and positive image of the outlet.

Their stores were also designed with the environment in mind, even though there had been no directive to do so from the executive level. These initiatives, as well as their more environmentally friendly manufacturing practices, such as using rail for shipments instead of trucks were, very much in line with the company’s corporate philosophy and culture.