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The report aims at providing an insight into e-business application. The report revolves around the future of retail store, the meaning of being online for the brick and the motor stores and the future of the retail in Australian subcontinent. The report commences with a brief description on the current operation of Aldi Supermarket (aldi.com.au, 2018). The debut store of the Supermarket started in Australia in the year 2001. In a short span of time it became one of the top ten retailers of Australia. Aldi also aimed at having huge future prospects through seeking new property, employee opportunities, major investments and logistics. The report also puts forward analysis of the various concepts and trends in defining the future of the retail industry. The future of retail industry experience depends on the disruptive forces like the changing patterns of spending of Australian customers and the arrival of the newer companies that introduces newer approaches towards retailing. There are also discussions on recommendations of how Aldi can become increasingly effective with the usage of the internet technologies.
Brief Description of Current Operation of Aldi Supermarket
Aldi in Australia aimed at having huge future prospects through seeking new property, employee opportunities, major investments and logistics. The introduction of the store not only influenced the prices of the grocery but led to the improvement in the quality and the perception of the private labeled good and led to the introduction of initiative that was not seen before.
The current operation of Aldi supermarket focuses on providing higher quality products at the lower prices (Heffernan, 2016). The supermarket chain thus puts forward exclusively branded products in limited range and focuses on the policy of the price change. The key strategy behind Aldi’s operation lay in focusing on the exclusively branded products. Aldi forms a partnership with the leading manufactures for producing own branded products. One such product is vegemite that is offered and is often a target for replacement when a lower cost and higher alternative quality remains sourced. However, Aldi’s capacity of reducing cost lies in it’s the provision of putting forward a limited product range. Aldi takes the market lead in determining the stocks based in terms of the product characteristics. The supermarket store then seeks suppliers who are able to presents the products with required characteristics and competitive price. Aldi makes the products available in the most popular sizes and therefore unlike the conventional supermarkets stocks only 600 to 700 lines instead of the20, 000 lines. This implies that Aldi only stocks up a single size of each of the product
Figure 1: Graphical Representation of Business Cost, Profit Margin and Good Cost
Source: (aldi.com.au, 2018)
In other words, the operation of Aldi is based on a strategy that involved strict focus on the core business. Therefore, they did not follow the practice of other supermarkets like the Woolworths and Coles in undertaking expansion of the retail base for including pharmaceuticals, liquor, petrol and online shopping. The only area where Aldi deviates from the strict policy of selling the core products remains in the practice of ‘surprise buys’ where batch of products like computes or televisions get sold in stores for fixed period. Such ‘surprise buys’ are prepared and brought in bulk by the supermarket with its lower price and higher quality policy.
Aldi makes profit by limiting the staff count per store along with omission of the position of floor managers (Arli et al. 2013). In addition the stocks of the supermarket remain displayed in the on pallets and boxes thereby ruling out the need for self stackers. Besides the shoppers also pay for the bags and pack the items themselves. The store also undertook operation from within a smaller floor space that implied a lower rent. However, the lack of promotions and brands leads to the removal of power play between the suppliers and the supermarket. Thus, the smaller brands that are unable to deal with Woolworths and Coles find home in Aldi. Therefore, the emergence of Aldi not only gave the suppliers more option for choosing from but also allowed customers in getting value for their money.
According to Chandramana (2018), with the extensive competition within the retail market the ability of optimization in serving the business process while ensuring the satisfaction of the customers has not been more important. Thus, for surviving prosperously, it has become necessary for the retail to manage and channelize data for working towards the customers delight while generating the healthy profits. Big retail players applies data analytics at each stage of retail process thereby tracking the emergence of the popular products , forecasting sales and the future demand via predictive simulation and optimization of the product placements through customer mapping. It also helped in the identification of the customers interested in the particular products based on the past purchase behavior thereby finding the best possible way in approaching them through the targeted marketing efforts and ultimately deciding on next sell , forms the core of data analytics. The application of the business analytics not only shapes the marketing strategy but also the future of retail industry (Ward, 2016).
Thus, according to the article, the big data helps the retailers in the creation and identification of the client profile, optimization of price, generation of loyalty of the customers, prediction of demand, inventory management and identification of the return on investment opportunities and detection of fraud.
Baiaescu (2018) put forward that the world of retail is undergoing a constant change under the influence of the legislative, technological, economic, political and social factors. These changes generate transparency along with uncertainties and predictability. Therefore, in global context of uncertainty and predictability, the retail industry moves across the world with a distribution that helps in reflecting the present configuration of global economic analysis power. However, based on the global trends and the developments, the market for consumer good raises complicated issues for the retail companies. Based on the strong competition the retail companies of the developing countries face the need of solving the issues related the integration of the market mechanism, problems diagnosed as s result of the competition and development.
Thus, from the pragmatic perspective, it can be stated that retail industry can develop simultaneous projections in the three major axes that includes the company, consumer and the society. Hence, marketing in retail sector depends on stronger strategic reflection along with well structured thinking related to management.
Vida, Reardon & Faidhurst (2013) stated that traditional retail operations were considered as one of the poor candidates in context of the international expansion. However, firms in the matured retail markets have gradually turned into the international markets for the purpose of strategic growth. However, the retail firms are quite slow in responding to challenges of the international expansion either due to the higher specificity of culture in traditional retailing or foreign restrictions in operations or the presence of the trade barriers. Thus, matured retail markets have considered the international opportunities as means of future growth.
The presence of various external factors has led to the steep internationalization of retail in the recent years (Cavusgil & Knight, 2015). Some of the factors relates to general environment of the business while others remains specific to the industry. These included the saturation of home markets along with the higher opportunities of growth abroad, the presence of the large volume of retailing with the availability of greater resources along with homogenization of the consumer demand across world markets, and opening of the markets that earlier served poorly
According to Hortaçsu & Syverson (2015), the past 15 to 20 years have experienced visible and substantial changes in the way the retail business is conducted. There have been two consistent and powerful narratives describing the happenings of the retail sector. The first prediction represented the migration of the retailers in the online medium thereby resulting in the virtual extinction of the physical retail. The second prediction put forward that the future shoppers will head towards either supercenters or the warehouse clubs. The online retail will contribute in shaping the retail and emerge as the dominant means of commerce. It has however been found the over the past 15 to 20 years, supercentre format and the warehouse club imposed greater impact in shaping the retail.
Millington (2016) stated that retail sector in Australia and the other countries represents a vital sector for overall economy and almost every Australian remains influenced by the efficiency that retail sector portrays. The efficiency of the retail operation remains influenced by the availability of the suitable stocks related to the retail property in specific locations for the benefit of both the retailer and the consumer. Nevertheless the retailers must be able to provide higher level of service to the consumers at the competitive prices as a means of future growth.
Recommendations on Efficiency of Retail by Using Internet Technologies
1. It can enhance Customer Acquisition: The use of the internet technologies can enable Aldi supermarket in gathering enhanced information about customers (Balaji & Roy, 2017). The use of internet technologies will enable the supermarket in sending a text message or push notification to the client that would encourage them to stay and thereby complete the sales.
2. It can enhance Customer Experience:The use of internet technologies will help in delighting not only the general customers but also the repeat buyers.( Laudon & Laudon, 2016) Such technology will help in the creation of in store experience through localized, personalized coupons and offers via the store app on making an entry.
3. It can help in Saving Money:The use of technology will enable the retailer in predicting the needs for further restocking. It might also help in incorporation ofRadio-frequencyIdentification (RFID) sensors for tracking movements of products across supply chain (Lee & Lee, 2015). This will also help in reducing the quantity of the lost stock and thereby cut down on the inventory and the lost profit. The internet technology might also enable the retailer in understanding the buyer behavior and the traffic patterns of the customers.
On a concluding note, it can be said that in spite of the concern regarding the diminishing retail activity in face of the disruption, the traditional retail of brick and mortar still remains alive. Given the positive results of the retail in the past year close to seventy percent of the Australian retailers expected a better performance of the economy that would continue in the future thereby presenting positive prospects for the retail business. The Australian retail had performed quite well in face of enhanced competition generated by the overseas retailers that made an entry into the Australian market.
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