The pound store phenomenon: high demand for low prices

As the BBC programme "Pound Shop Wars" demonstrates, shopping for bargains continues to be a key aspect of consumer behaviour--and competition for customers is intense. Pound stores are a relatively recent retail development. Poundland was founded in 1990, 99p Stores was founded in 2001. One reason that pound stores were able to expand so rapidly was the demise of Woolworths, which left many high street retail locations vacant.

Another reason for the pound store phenomenon is that middle-income shoppers are increasingly concerned about the price of their household items and want to stretch their budgets. This results in high demand for low prices. Online shoppers are also bargain hungers: Poundshop.com was founded as an online retailer in 2014, for example.

Soon, 99p Stores will be rebranded because it has been acquired by competitor Poundland. The acquisition will mean Poundland operates 800 stores. Despite its size, the retailer will still have to compete with the mighty Aldi, Asda and other large-scale rivals that promote deep discounts to attract shoppers.

As the recession recedes, many shoppers will continue the routine of hunting for bargains. Therefore, the pound stores must now increase their efforts to attract new customers, retain existing customers and clarify their value propositions for meaningful differentiation.

Fast Fashion and Sustainability

Is sustainability compatible with fast fashion? Even though fast fashion is based on speedier fashion cycles and adoption of new styles and clothing items, H&M, Zara and their competitors recognise that 'throw away' fashion is not just wasteful, it can contribute to environmental damage.

H&M, based in Sweden, is increasing its focus on sustainability. It has a Chief Sustainability Officer to keep the retailer on track toward green goals. And it issues a sustainability report to demonstrate what it's doing to save the planet and reassure customers of its commitment to the natural environment.

Further, H&M has added clothing made from sustainable materials and, just as important, it actively encourages recycling inside and outside the organisation. Among other initiatives is a fashion collection programme to encourage consumers and designers to make the most of garments by reusing materials, passing garments along for use by others or turning used garments into something else.

Marketing Brompton Bicycle

Only two companies still manufacture bicycles in the UK, and one is Brompton Bicycle of West London. Brompton's MD says its folding bike is favoured by city-dwellers who want 'a solution to an urban living problem'. He tells the Guardian: 'We are in the urban transport industry; the competition for Brompton is the tube or the car'.

Brompton's bikes are differentiated by their sturdy frames and, more importantly, by how compact they become when folded for storage. The company has a cult following, with some customers chronicling their bike adventures on blogs or via other social media. (Brompton has more than 17,000 Twitter followers and 42,000 Facebook likes plus more than 7,000 Instagram followers.)

Brompton is growing rapidly to meet ever-higher demand for convenient transport in cities domestically and abroad (urban locations and consumer behaviour are clearly key to its market segmentation). This year, the firm projects unit sales of 50,000 in more than 40 nations, with only 20 percent of its output remaining in Britain. Asia and the United States are particular target markets with strong demand for commuting options such as folding bicycles.

By 2021, the company plans to double its output and is therefore relocating to a larger production facility next year. And it's also stretching its product line by planning for an electric version of its popular folding bike, to 'get rid of the sweat and Lycra' and make bike commuting less strenuous and more fun.

Coca-Cola's One Brand Strategy

Even though Coca-Cola isn't changing its name or any of its products' names, the company launched a 'one brand' strategy in the UK market earlier this year. From May, Coca-Cola will be the company brand and individual product lines (such as Diet Coke and Coca-Cola Zero) will be variants or subsets of the company brand.

The purpose is to increase awareness of the low- and no-cal product variants and -- by 2020 -- achieve the goal of having 50% or more of Coca-Cola sales in Great Britain come from these variants.

Now the Coca-Cola company brand will be the most salient aspect of packaging, with variant names featured below the main brand in this redesign. Ads will focus on the Coca-Cola brand and benefits, with individual variants pictured or mentioned briefly. The aim here is to emphasise the brand's heritage and associations as an umbrella for all variants.

This approach has the potential to strengthen all variants by association with the well-known, well-liked company brand and increase awareness of the low- and no-cal variants as choices available to Coca-Cola fans.

However, changes to packaging (as shown above) can also be risky because consumers may not recognize the variant they prefer in its new packaging or may be confused by the new brand and packaging offers. Meanwhile, Coca-Cola is introducing the one brand strategy in more nations and supporting it with advertising and distribution activities to motivate purchase.

Aldi's growth strategy on both sides of the Atlantic

Aldi--the German-owned discount grocery chain known for super-low prices and no frills--is expanding across the UK and in the US.

With a UK market share of more than 5% the chain's growth strategy means investing £600m to open 130 additional stores and increase its workforce to 35,000 by 2022. Costs are low, so prices are low.

Bring-your-own-bags to tote groceries home--and if you buy an Aldi's UK bag, the pennies go to the RSPB, aiding a good cause and reinforcing the company's reputation for social responsibility. Aldi UK has attracted more than 1m Facebook likes, 188k followers on Twitter, 7,500 followers on Pinterest and a few thousand followers in Youtube.

Across the pond, Aldi is getting ready to compete even more aggressively with Trader Joe's and other low-price grocery chains. Within a year, its growth strategy calls for 45 new stores in California, where local consumers value both quality and low prices. Unlike the bare-bones assortments of the past, Aldi's is testing organic specialties such as cage-free eggs and chia seeds to differentiate itself and attract new shoppers.

Aldi US is as social as Aldi UK, with 1.5m Facebook likes, a few thousand Youtube followers, 23k Twitter followers and 24k Pinterest followers.

Even a penny can help UK charities

Even a penny can make a difference--it costs individual consumers little to donate but spare change from many people adds up over time. This is an aspect of consumer behavior being applied by several non-profit groups to encourage micro-donations to charities.

For example, the UK charity Pennies has, for 5 years, been collecting pennies from consumers who agree to 'round up' their purchases at Domino's Pizza and other participating merchants. So far, the group has raised more than 2 million pounds for worthy causes, as you can see by reading its impact report here. Also check its Facebook page for the latest news.

Another non-profit group encouraging micro-donations is Penny for London, part of the Mayor's Fund for London. Here, the focus is on encouraging 1p to 10p donations by consumers who pay for transport or food with contactless methods such as smartphones.

Coinstar, the coin-counting machine network, also encourages micro-donations of coins for its participating charities, including British Red Cross, the Children's Society and Unicef. Pennies do count!