The supermarket…

…is increasingly becoming the place brands go to die.

Why?

because they only have 13 weeks to prove themselves.

because only incremental innovation is tolerated

because margin is more important than meaning

because volume is more important than value

because supermarkets are training shoppers and suppliers to be commodity traders

If you’re planning on launching an innovative startup, resist the temptation for immediate mass distribution. Rather, invest in the experience where the product is exchanged.

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3 thoughts on “The supermarket…

  1. I do wonder if the likes of Coles and Woolworths are moving down a path of reducing $ per shopping basket by eliminating brands (reducing range of options per category), and competing heavily on price. I reckon it opens them up to be hurt more by the likes of Aldo and Costco.

    Steve.

  2. I suspect they’re just trying to occupy both the lower-end prviate label space (and doing it a bit more cleverly than they have in the past) while also offering breadth. (I’m sure they make quite a bit on $10 sausages as well as the $5 ones).

    Aldi and Costco are two quite different competitors.

    Aldi will establish a niche of around 10-15% of the market within a decade (with maybe 300-350 strores nationwide). That’ll be very profitable due to their margins and low costs approach.

    Costco is a tougher a model to predict. It requires a pretty big shift in buyer behaviour (destination shopping to buy in bulk, and provision of such products by suppliers). The economies of scale and infrastructure required might well be beyond the size of the Aussie market.

    Returnign to Coles and Woollies. if they kill off some externally provided brands along the way through their copycatting and price-cutting, it’ll hurt the supermarkets’ range advantage.

    Interesting times…

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