Watching supermarket competition

I noticed the announcement this week that Aldi is to open longer hours and release special deals twice a week in an effort to combat the work done by Coles and Woolworths over the last year which has seen them encroach on the Aldi end of the supermarket space.

As the these three and other supermarket chains battle it out to own supermarket shopping in Australia, we can learn something from their fights.  For example, the decision by Aldo to release specials twice a week is interesting to me on a couple of fronts:

1. Most newsagents don’t offer regular, weekly, specials which are marketed as such.
2. Any who do probably have not changed their approach in years.

Specials are not about deep discounting for the sake of it.  In the supermarket model, specials are used to reinforce the overall value proposition of the supermarket to the consumer.  They lure shoppers who then purchase other items at regular price.  Specials almost always are funded by suppliers in a way which protects the supermarket margin.

But the approach to specials has changed in the last year with the down down and other campaigns.

The challenge to this non expert in the area is that through the focus over the last year on lower price, they have educated shoppers about price, that price is the most important point.  On products on which we compete, this presents us with a challenge.

Given that price is the easiest point of difference for a competitor to respond on, I would have thought that supermarkets would have been better of pursuing points of difference in other areas where competition is harder. I think this is why we need to focus on non-price competition points in our businesses, especially around products where we compete with supermarkets.

Blue Ocean Strategy is an excellent book to read about how businesses should differentiate.  I read it a few years ago and consider it to be one of the best business books I have read.  It talks down price as a point of competition and urges focus on competing in other, exclusive, ways.

With plenty of what we sell being also available from supermarkets, how do we position out businesses against their aggressive campaigns and this latest battle now joined by Aldi?  Do we try?  While many newsagents leave supermarkets to play their games, not seeing them as our competitors, we need to ensure we are aware as our retail channel is of tremendous interest to them.  We take close to one billion dollars in revenue which they would like to get through their registers.