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Archive for August, 2008

Brand Watch

Own-Label, Anti – Marketing Fuels Aldi

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The Germans are coming. That was the clear message from TNS, which revealed that German discount retailer Aldi had grown its sales in the UK by 20% in the past three months compared with the same period in 2007.

If ever there was a good time for Aldi to make a move on the British shopper, it is clearly now (and the American shopper for that matter). With supermarket prices rising faster than at any time in the past 10 years, and an inevitable recession taking hold, Aldi's low prices could enable it to grasp an opportunity to grow its UK market share from 2.9% to the 10% figure the company seeks.

Tesco is certainly taking the threat seriously. For the past 12 months, Britain's leading supermarket has used a secret, mocked-up Aldi store at its headquarters in Cheshunt to develop Aldi counter-strategies. Finance director Andrew Higginson recently acknowledged that hard discounters such as Aldi were enjoying their 'moment in the sun' and Tesco is reported to be on the verge of announcing major price cuts across many of its own-label lines in direct response to Aldi's growing popularity.

Aldi is now acknowledged as operating the leanest low-cost model in the world. The key to its success is low service and even lower choice. While the average big four supermarket will carry up to 40,000 SKUs in a typical store, Aldi keeps that figure at about 1000. This results in massive economies of scale, huge buying power and an enormous reduction in the operating costs of Aldi stores, which are smaller and require very few employees. Aldi also keeps its costs low by reducing profits – a typical store operates on gross margins of 15%, about half that of the big four British supermarkets.

The really interesting issue about Aldi, however, is its approach to brands.

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Industry Issues

Ad Industry Blind To DVR Threat

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In the pivotal scene of the epic movie Spartacus, Kirk Douglas, playing the eponymous renegade hero who has led an uprising of his fellow slaves against their Roman masters, now faces defeat at the hands of the Roman army.

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Brand Consulting

The Strategy Of Consulting

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The Strategy Of Consulting

Not too long ago Management Consulting News asked my opinion on business strategy and the consulting industry. Maybe you will share my opinions. Maybe you won’t.

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Branding and China

China’s Brands Imitate To Dominate

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From the moment the fireworks exploded over Beijing at the Olympics’ opening ceremony, you knew something fantastic was taking place.

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Brand Value & Pricing

BSI Holiday

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We’re actually taking a break! Branding Strategy Insider will be back in a week. A warm thanks for your loyal readership and participation in this conversation about brands and branding.

Best wishes,

Derrick Daye

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