The Significance of Innovation in the Supermarket Industry
Discuss about the Innovation as a Resource to a Sustained Business.
Innovation is of utter importance to respond to the emerging trends and be able to attain a sustained business performance. The degree of threats increases with the level of competition in the respective industries. This particular study is confined to the supermarket industry in Australia. The supermarket industry in Australia is highly competitive due to a fact that there are giant supermarket brands such as Woolworths and Coles and also that the competition policy is quite favorable to new business (Tanaka et al., 2017). Additionally, the proposed entrance of Amazon in the country will further the level of competition. Hence, this is important that the existing supermarket brands are efficient enough to use the innovative strategies in order to remain competitive and produce the sufficient reasons for customers to think of a visit.
This study is focused on identifying the best feasible business model to the chosen organization Aldi. The ‘needs’ for a business model has been felt due to the changing behavior of consumers for shopping and also due to the proposed entry of Amazon in Australia. Aldi which has steered the Australian market with its innovative and cost-effective business model should consider the proposed model in this study in order to remain progressive with sales and competitive as well in the market. Hence, the study is purposefully aimed at proposing a suitable business model to Aldi and also highlighting the group work in regards to quality of contribution & collaboration.
Aldi has received a great response from the Australian customers and it is also ahead to Coles & Woolworths in terms of a profitable venture in the last five years (Thomsen, 2018). However, the real worry is the changing landscape of shopping formats. The ‘Brick & Mortar’ format of stores is now seen as an outdated option by many customers in specific the youths. This is due to the shopping interface and the ease of shopping which is inferior to ‘Shopping Online’ format (Pappas et al., 2016). Youths, in general, used to have the packed schedules in their universities, workplaces and others. They hardly have times to visit physical stores and purchase the needful goods. Many of them manage it during their week offs while others wish to spend their week offs on other important works. In addition, the youths are expected to be the customers of future as they will be doing the maximum of shopping in the coming days (Thananuraksakul, 2018). These are the few reasons which have encouraged the youths in specific to incline to the online shopping where they can purchase the needful products by just following the few online procedures on either their PCs or the Smartphones. They are not now required to be in physical stores to make the purchase (Gao & Bai, 2014).
Identifying a Feasible Business Model for Aldi
The above facts have outlined a few issues such as Aldi like other giants may struggle to attract the youths who are expected to be the future customers. Additionally, the entrance of Amazon may give enough reasons to customers to use it as their shopping platforms. Hence, the success that Aldi had in the last five years may be eclipsed due to the changing shopping behavior of customers.
The escalated threats such as the changing shopping behavior of Australian customers and also the expected entry of Amazon in the country require a solid counter response from Aldi and other supermarket giants. The existing business model is cost-effective due to a fact that it takes a different route than the traditional one to offer discounted rates. It offers discounted rates on few occasions, not on a daily basis and thereby, it generates ample of time to effectively plan and manage the inventories. It rather believes in offering competitive prices which it does with its smart strategies like the layout structure of shelves, the packaging system and others. The range of products is limited and customers are also required to pay for packaging. Both the strategies help to cut down on the daily cost (Dawes & Nenycz-Thiel, 2014). However, such strategies might not work when customers will get the opportunity to shop at Amazon. This is why it is important to consider a new business model which could potentially compete with Amazon.
In regards to the escalated facts in the aforesaid section, the “Bricks and Clicks Business Model” appears to the learner as the most effective. The model provides the opportunity to operate both in the form of physical stores and also through online. It can be hugely advantageous for customers and for business as well. Interestingly, it does not also hamper the traditional values of physical stores. It just requires integrating the one or few of the stores with the online presence and offering customers both way of options such as either they can visit physically to stores or they can also book it online. They can also collect their goods after they have booked from the dedicated physical store or can also get it delivered to them at their postal address (Jones & Livingstone, 2015).
The suggested business model is beneficial for both customers and business. Following is the list of benefits:
For customers: It provides customers the much-needed option which is they can either visit stores to get their products or can also book it online. Such system may be limited to one or few stores which entirely depend on the management policies. Stores integrated with the online system will offer customers multiple ways of shopping and receiving of products. They can either be in stores or also book it from online website. Additionally, they can collect their products from physically visiting stores or they can also get it delivered to their home. Hence, the mode of shopping will be a lot more convenient. Customers will be able to make the purchase even during their busy schedules. They can also visit stores when they feel like having an outing. From the psychological point of views, many customers want to observe the products by physically observing it before they make the purchase decision (Newman, Wachter & White, 2018). The proposed model will provide them the similar opportunity which is not realistic from Amazon.
Benefits of the Suggested Business Model for Customers and Business
For business: It is far easier for an established retailer to implement the “Bricks and Clicks Business Model” than for a startup business. This is also advantageous in regards to the total costs of production. This is due to a fact that customers can return their goods to stores by physically visiting to it whereas in the online format, shipping is required for undelivered and returned items. Hence, a significant cost can then be saved by reducing the wastage costs (Hagberg, Sundstrom & Egels-Zandén, 2016).
The suggested business model can have the number of critical success factors. It would be able to meet the demand of changing consumer behavior for shopping. The suggested model will provide both the traditional and the contemporary format of shopping. Customer will have option to visit to the physical stores and purchase the required goods. They will also have the option to book it from the dedicated online website and also provide the preferred mode of delivery such as collecting it personally from the specific physical stores or requesting a home delivery (Yan et al., 2018). Hence, the shopping experience will be much more convenient. Customers may be able to feel the difference as well. Unlike the online shopping platforms, customer will be able to observe the products by being present in the physical stores. As stated earlier, few customers have this tendency to confirm their choice of products from every perspective before they actually make the purchase. The suggested model will allow customers to commence such actions by visiting to physical stores (Jones & Livingstone, 2015).
The feasibility of the suggested model will be checked on the basis of the following factors:
Total costs of production: This is indeed challenging to remain cost-effective while dealing with the range of stocks. However, Aldi has successfully managed such difficulties in the last five years. The use of cost-effective model and going against the traditional model of everyday discounted rates as followed by other supermarket giants have both helped Aldi to successfully reduce its total costs of production (Sinha, Gokhale & Rawal, 2015).
Ease of implementation for traditional retailers: It is also easier for traditional retailers to implement the suggested business model. It is comparatively challenging for startup businesses. Established traditional retailers such as Aldi will find this comparatively easier to bear the expenses involved in introducing the online services (Jones & Livingstone, 2015).
Marketing strategies: Aldi is still expanding in Australia. Hence, they can come up with the recommended model in its new stores. Few of the old stores can also be considered for the purpose. In either case, effective marketing communication will be needed for making the customers aware of this new strategy (Batra & Keller, 2016).
Critical Success Factors of the Suggested Business Model
Conclusion
Therefore, the suggested “Bricks and Clicks Business Model” is very much feasible and beneficial for Aldi. Aldi should consider the model in order to produce a strong fight to Amazon which is set to enter the Australian retail sector. The model can be helpful in attracting the youths as it offers the online format for shopping as well. The enhanced convenience of shopping with this model will also help the company to increase the customer retention rates.
Contribution to the team
The group members including the learner have shown the utmost potential in giving their contribution to the work. Constructing a business idea is never an easy task. It requires a thorough analysis of the concerned industry before putting forward the ideas. Sometimes it becomes difficult for an individual to come up with a point and produce something worthy of value. Sensing the utmost challenges, the other group members have shown the required teamwork which was also evident in the brainstorming ideas. We as a group have collectively studied the different ideas and tried to identify the best feasible one. We did it by analyzing the advantages and disadvantages of each of the ideas of the group members. The brainstorming technology has helped the group to reach to a conclusive section and they were able to come up with a model “Bricks and Clicks Business Model”.
Achieving group consensus
It is indeed difficult to reach to the group consensus. We also faced a lot of difficulties at the initial stages. The brainstorming process had produced a list of model and we had confusion for the best feasible one. The real challenge was to decide the best model as every member of the group had believed their model as the most suitable one. However, we never let our teamwork get hampered by such challenges. We as a group were able to overcome the issue by making the analysis of the entire models on the basis of their advantages and disadvantages. The feasibility of the model was also checked and hence, we finally settled with the “Bricks and Clicks Business Model”.
Portfolio of materials
Such projects require a portfolio development of the materials that are needed. This helps to work in an organized way. An organized work is necessary to avoid any conflicts and confusion during the project. Everybody including the learner as well has contributed in developing the portfolio of materials. All have come up with their ideas for business. We as a group had constructed the portfolio in such a way that it contains all the necessary elements for a project work. The portfolio had the different business ideas from different group members. It also had the respective advantages and disadvantages of the different models that we had found with the help of the brainstorming technique. More, the portfolio construction in this way had helped us to reach to a one most feasible business model.
References
Batra, R., & Keller, K. L. (2016). Integrating Marketing Communications: New findings, new lessons, and new ideas. Journal of Marketing, 80(6), 122-145.
Dawes, J., & Nenycz-Thiel, M. (2014). Comparing retailer purchase patterns and brand metrics for in-store and online grocery purchasing. Journal of Marketing Management, 30(3-4), 364-382.
Gao, L., & Bai, X. (2014). Online consumer behaviour and its relationship to website atmospheric induced flow: Insights into online travel agencies in China. Journal of Retailing and Consumer Services, 21(4), 653-665.
Hagberg, J., Sundstrom, M., & Egels-Zandén, N. (2016). The digitalization of retailing: an exploratory framework. International Journal of Retail & Distribution Management, 44(7), 694-712.
Jones, C., & Livingstone, N. (2015). Emerging implications of online retailing for real estate: Twenty-first century clicks and bricks. Journal of Corporate Real Estate, 17(3), 226-239.
Newman, C. L., Wachter, K., & White, A. (2018). Bricks or clicks? Understanding consumer usage of retail mobile apps. Journal of Services Marketing, 32(2), 211-222.
Pappas, I.O., Kourouthanassis, P.E., Giannakos, M.N. and Chrissikopoulos, V., (2016). Explaining online shopping behavior with fsQCA: The role of cognitive and affective perceptions. Journal of Business Research, 69(2), 794-803.
Sinha, P. K., Gokhale, S., & Rawal, S. (2015). Online retailing paired with Kirana—A formidable combination for emerging markets. Customer Needs and Solutions, 2(4), 317-324.
Tanaka, T., Hamaguchi, T., Saigo, T., & Tsuda, K. (2017). Classifying and Understanding Prospective Customers via Heterogeneity of Supermarket Stores. Procedia Computer Science, 112, 956-964.
Thananuraksakul, S. (2018). Factors influencing online shopping behavior intention: A study of Thai consumers. AU Journal of Management, 5(1), 41-46.
Thomsen, S. (2018). CHART: Here’s how big Aldi now is in Australia. [online] Business Insider Australia. Available at: https://www.businessinsider.com.au/chart-heres-how-big-aldi-now-is-in-australia-2017-5 [Accessed 8 May 2018].
Yan, W., Xiong, Y., Chu, J., Li, G., & Xiong, Z. (2018). Clicks versus Bricks: The role of durability in marketing channel strategy of durable goods manufacturers. European Journal of Operational Research, 265(3), 909-918.
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