Service and Operations Management

The Hard Discount Model in Retailing

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During the 1990s and early 2000s the hard discount retail channel has seen tremendous growth. In this technical note we analyze the elements that form the strategic foundation of this business model and provide a detailed analysis of the underlying operations.
Bibliographic citation: Sachon, Marc, "The Hard Discount Model in Retailing", IESE, PN-465-E, 04/2010
Date: 20/04/2010
Author(s): Sachon, Marc
Document type: Technical Note
Editor(s): CIIL - Centro Internacional de Investigación Logística
Department: Production, Technology and Operations Management
Languages: Spanish / English
Learning objective This technical note provides a detailed analysis of the hard discount retail model. In 2008 the two largest hard discounters, Aldi and Lidl, generated sales of more than 40 billion each. Both of them have had tremendous success in Germany and elsewhere. Aldi has expanded to 15 countries outside of Germany and unlike many other international retailers has never retreated from a country it entered. Traditional retailers have taken notice of this very successful retail format and are trying to respond to the threat posed by Aldi and its copycats. In this technical note we provide a detailed analysis of the pillars of hard discounting. It should be used with the Aldi case (P-1071-E), preferably to be handed out after class.