Analysing the Netto Essay Example

recruited locally without any job demarcations. Employees are trained in all aspects of the store's operation, from checkouts to filling shelves, cleaning, and unloading deliveries. The store manager is expected to spend 95 percent of their time on the shop floor to build a positive team spirit. Netto's main successful strategy is adopting international operations successfully in four markets: Denmark, UK, Germany, and Poland.

Netto's expansion was driven by its distinctive corporate culture which fostered informal vertical and horizontal communication and free access to information. This culture encouraged staff members to generate ideas for new products or clearing lines, and the company structure reflected this. Netto also utilized a range of sales promotion strategies, known as merchandising, to ensure products were easily accessible and displayed prominently at the point of sale. Their merchandising policy was adapted to meet local needs while still maintaining the standardization of store layout through their distinctive corporate logo and colors.

Netto's successful 'Buy British' policy is due to their larger number of pallet lines and greater sales of tinned products in their range. Netto competes on both an industry level, directly competing with Kwik Save, Aldi and Lidl, and on a regional level, competing with Asda, Tesco and Wm Morrison.

Netto has implemented successful marketing strategies that focus on the 4Ps (price, place, promotion and people) to meet consumer needs and differentiate itself in the market. The company's ability to secure prime locations has contributed to its success in Denmark (240 stores), UK (118 stores), Germany (121 stores) and Poland (15 stores). By producing the right products at the right prices, making them available in strategic locations, and effectively promoting them, Netto has

outperformed other discounters.

Netto, with its constantly changing product range, provides nearly 90% of consumers' daily needs at competitive prices and a unique product selection. The appearance of the non-branded products (NBPs) in the range is typically 15-20% cheaper than well-known brands. Additionally, Netto's range of products includes one-time offers and frequently updated lines, which are replaced weekly.

Potential issues with Netto's ability to maintain their competitive advantage can be identified by analyzing their competition. To properly analyze and maintain their competitive edge, it is important to consider Porter's five forces for industrial profitability. Any changes to these forces could have direct or indirect effects on Netto. Therefore, a competition analysis was conducted to determine the optimal position in the industry for Netto in order to successfully defend against the five forces, or potentially influence them in their favor.

The main force that will affect Netto is rivalry with other market competitors. The competition within the industry is intense between supermarkets and discount stores as everyone strives to gain a bigger market share. Mergers and acquisitions have been happening since 1997, including Wal-Mart's entry into the UK market by acquiring Asda and Kwik-Save merging with Somerfield. Netto's biggest threat in the discount market is Kwik-Save, which has merged with Somerfield to create a powerful discount giant. To maintain its competitive edge, Netto should focus on expanding its product range and continuing its customer-oriented approach that has been successful so far.

* In order to prevent the impact of increased supply costs on our prices or product substitution, we must address the strength of supplier bargaining power, especially the dominance of certain companies like Kwik-Save. To mitigate this, we

need to explore alternative supply sources. * The entry of large players Asda and Tesco into the discount market will likely harm Netto's profit and sales by leveraging their significant buyer bargaining power over suppliers, thanks to their high volume purchasing.

Compared to Netto in the UK, Lidl enjoys a stronger brand image. However, there is a significant threat of substitution due to the growing popularity of technological advancements such as Internet shopping and loyalty programs offered by major supermarkets. Supermarket Banking and similar services offered by large retail chains provide customers with added convenience, which may lure Netto and other discount store customers away from their usual shopping destinations.

The progress of supermarket services has caused a decline in the discount market, which is expected to continue. Netto must invest in technology and develop loyalty programs to stay competitive with larger companies. The only new competitor in the UK market is Wal-mart, who recently acquired Asda, giving them an advantage over other supermarkets and posing a threat to Netto and the discount market.

The potential issue that we envisage is the entrance of Tesco into the discount sector, leveraging their impressive selection of products and strong branding.