Price competition has no way out, lack of buyers and supply chain capacity, can create the ultimate cost performance?

Price competition has no way out, lack of buyers and supply chain capacity, can create the ultimate cost performance?

With the improvement of cognition and experience, operators have realized that price competition is not sustainable, and high cost performance is the core competitiveness. The difference between the two is that one will eventually be unprofitable, while the other is not only low price but also profitable. Whether it is the private brand that wins the differentiation competition or the reason for customers to spend money in the store, the root cause is that the store can provide cost-effective goods and services, and there is a value that customers cannot abandon. However, it is not easy to do cost-effective, if the lack of good buyer ability, product selection and supply chain is not good, the ultimate cost-effective is not good.

The slogan of Wal-Mart’s hypermarkets is “everyday price parity”, but the price performance ratio is not as good as that of Sam’s Club, another business format of Wal-Mart. However, Sam’s stores with limited categories cannot do as well as ALDI, whose minimalist SKU can maximize the turnover of goods and minimize the purchase cost. The savings are given to customers. Storehouse member stores select customers through prepaid members, improve consumption frequency with high cost performance and strengthen member bundling. The more consumption, the higher the cost performance. Hard discount store ALDI does not adopt membership system, and attracts customers purely with high cost performance. It is simple and extreme, but has stronger customer stickiness. In fact, membership stores are also hard discount stores, but the business model is different.

Price competition has no way out, lack of buyers and supply chain capacity, can create the ultimate cost performance?

Membership or minimalism works because of strong supply chains and private labels. Limited products can maximize SKU sales and have good purchasing bargaining power. Private brands are compared with well-known brands, which occupy a large proportion in limited categories and can better control the quality and price, which is the basis for creating the ultimate cost performance.

Driven by continuous and efficient operation, the brand power of the store will gradually strengthen and eventually capture the minds of customers, becoming the first choice of customers’ needs. It is much easier for physical stores to do omni-channel operation and private sector operation when they have captured the minds of customers. With the irreplaceable value of private brand, uniqueness and high cost performance, customers will not be tempted by other platforms and channels.

It can be seen that the most effective extreme cost performance is the commodity, which is generally thought to be only suitable for large retailers with scale effect, but this logic is reversed. In fact, only with the extreme cost performance can the business become larger. For ordinary physical stores, when the commodity power is not enough to occupy the mind of customers, they also need to look for different extreme cost performance.

The domestic market and consumption habits are diverse and complex. For example, the difference in food culture will lead to a big difference in the floor efficiency of chain stores in different places, indicating that raw materials and demands are more abundant. These do not exist in Europe and the United States, so they have a high degree of industrial concentration, relatively simple products with scale characteristics, it is relatively easy to build the ultimate cost performance of products.

In essence, the ultimate price ratio can be defined by oneself, can be developed by oneself. The high quality and low price of goods is one kind, the unique characteristics of goods is another, the life proposal to improve the happiness index is another, the category matrix to solve the dining table is another, and the unique service to make customers trust is another.

In fact, there are two kinds of commodity value, one is problem solving, which is performance, and the other is satisfaction enhancing, which is psychological. Operators tend to focus on price performance and are willing to pay for it, but rarely pay attention to value performance and satisfaction level, which is increasingly important in the current evolution of retail, breeding more opportunities.

In short, to provide the ultimate cost performance is to have stronger competitiveness, better operating efficiency and refined operation ability than the competitors. The most important thing is to study consumption habits and achieve precise positioning in the current demographic structure changes, so as to explore customer needs and provide life solutions.

The ability of physical stores does not depend on the size and product richness. Small and beautiful community stores can also improve the floor efficiency by only selling high-turnover products, and a small number of SKUs can also provide alternative and extreme cost performance. However, all these require some time and patience. No matter what kind of extreme cost performance is done, the business form will have the basis of scale. At this time, do not forget that the extreme cost performance of the product should be done well, because it is the lowest level, the longest and the most competitive.