Nowadays, the price of the products has become one of the most significant aspects that consumers take in consideration when they go to do their shopping. Customers increasingly demand lower prices, whilst they are spoilt for choice. And in this context, discount supermarkets such as LIDL or ALDI are adquiring more and more clients. Discounters attribute their strong performance to a highly efficient supply chain based on five aspects:
- Focused assortment: limiting the number of stock keeping units. Unlike traditional supermarkets with an average product range of 10,000 food and non-food items, or hypermarkets with as many as 50,000 items, discounters offer between 1,000 and 3,000 products.
- Standardized outlets: discounters stores are standardized not only in neighboring markets, but worldwide, which allows for efficient in-store processes. Lidl’s supply-chain infrastructure is organized with roughly 105 regional distribution centers supplying 10,000 stores; transportation is usually outsourced.
- Efficient replenishment: efficiency is the focal point for discounters package-design and replenishment processes. Shelf-ready packaging (SRP) reduces handling and waste and has a positive impact on branding—nearly 100 percent of discounters products use it, compared with only about 40 percent of non-discounters.
- Consistent no-frills approach: Discounters apply their no-frills approach throughout the entire supply chain. In warehousing, discounters build large distribution centers with lots of floor space and loading bays relative to volume. Although this ties up capital and requires longer distances for picking, it eliminates waiting times and the need for detailed timing of deliveries. It also leaves room for expansion without jeopardizing efficiency.
- Smart innovations and investments: Contrary to popular belief, discounters use innovative concepts to streamline store operations, warehousing and distribution. An example of this is selectively installing fully automated technology for the picking and packing of all ambient food in distribution centers. Like the SCP ( Schäfer Case Picking).