Discount Store Essay

773 Words4 Pages
2.3 Could Discount Stores survive E-Retailing? The transition to an online space poses several challenges for discount stores. The challenge for the discounters evaluating the potential of opening an online store is maintaining their momentum without losing focus on their core business model. The constant emergence of new technologies and the expansion of the digital economy places pressure on physical stores. The cost and complexity of setting up online commerce and business activities makes it difficult for discount stores to create an online shop. Discount stores tend to focus on consumers who are price conscious and looking for low-cost quality products. They tend to source high volumes of fast-moving consumer goods at a reduced price and therefore this makes it difficult for them to make online sales as the cost of delivery is expensive in relation to the price of the products being sold. This is evident in the trial that Primark carried out by selling clothes through the popular website ASOS. “Bason said the economics of selling Primark clothes online did not add up: At our price points we don’t think anybody can put a full service online and make money” (The Guardian, 2014). Retailing online is more complex for discount stores as their inventory is unpredictable. Processing, packaging and shipping are a costly part of retailing online for discount stores as their profit margins are disreputably low therefore the cost savings will have to be considerable to refute the delivery cost. Discount stores face the challenge of maintaining their reputation for value and selling low-cost products if inflation is on the rise and suppliers raise their prices. This may result in the need to rebrand as the number of items the store will ... ... middle of paper ... ...proved successful. For example, in 2013 Aldi Australia decided to move its liquor sales online. The discount company decided to expand to online liquor retailing in Australia as it was already popular amongst many other Australian companies. Aldi Australia managing director Tom Daunt stated that, "Online liquor will enable us to access that market, and there are many customers on the eastern seaboard who don't have an Aldi close by who would like to access our offer" (The Australian.com, 2013). To date Aldi have a website where customers can view and purchase the different types of alcohol available to buy as well as the different types of special offers. The website also features a tab titled ‘inspiration’ where customers can view different types of liquor recipes which could lead to possible add on liquor sales and therefore making this online retailing a success.
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