Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Thursday, February 12, 2009

Biological Product and Esselunga, an italian retailer

Woody Allen in on of his film to make on of his character very different from the normal people gave him the job of selling biological food. Nowadays in Italy biological food is everywhere: advertising on the street, advertising on TV that suggest people to hand to biological food, also a soccer team of the first division have tried a biological diet for one season.
In the end biological product became, during the 90's,very popular also in the supermarket.
Biological food are much more expensive, but they have a more natural taste, they are good for the health, and who produce them guarantee to have care about the natural environment and animals.
Italy is the European leader (and ranked 4Th in the world) in producing biological.
The Italian retail chain store Esselunga introduced the BIO culture in the Italian grocery store's market.
Esselunga is a very innovative company in Italy. It was the first grocery retail store chain in the country (an idea taken from the North America), the first to introduce online shopping and self-produced biological product (Esselunga BIO. Instead of Lob law's President Choice, Esselunga own brand are all made to have a cheaper price, many times the cheapest of the category, but as Esselunga BIO the quality is very high).
Nowadays 7 on 10 Italian people buy at least one biological product each time that they go to the grocery store (Italian people go to the there more often than Canadian one, at least 3 times a week).
The selling of biological food is incredible increasing (some product as a growth of 40% or 20% a year).
Esselunga with his own biological product is the leader in Italian grocery store.
Even if the brand is located just in some part of the north of Italy it has a turnover of 4,9 billion euros and controls the 9% of the Italian grocery distribution market. Its the 23rd largest Italian company, 4Th in the European retail sector.
Despite his dimension its still owned by the family and is not on the stock market (even if some indiscretion says that Tesco or Wal-Mart are going to buy it).
Altought its good food quality, Esselunga's power point is to have low price. The management say to be the cheapest grocery store in Italy and a lot of research confirm it. The most of its advertising campaign are focused on prices and on high-fidelity program that can make the costumer saving more money.
An interesting matter is that in the cities where both Esselunga and Coop (its first competitor) has stores prices are from 8% to 20% less than the national average.
In an Esselunga store for each type of product there is a sign on to advise the cheaper one (in Italy is not a common use), usually prices are very less that the one suggested by the producer (that normally is the lowest price that you can find).
So great quality and best prices, but not just that!
The location are very comfortable. The store are divided in "Sottocasa" and "Superstore". Sottocasa means close to your house. They are smaller than the superstore and are built in the city center and most populated area. They usually have a private parking,also if maybe not big enough for all the costumer, but in Italy the most of his competitor hasn't got it or if they do sometimes they apply a premium price on their business because they focus on the customer comfort.
The Superstore are very big location that sell grocery for about 90% of their business and then sell also other kind of product like electronics, book, newspapers and magazines, small household appliance, household goods). The choices of food in this places is huge so that you can find the same type of product in a lot of different prices and quality standard.
In the end I can say that each Italian city should have an Esselunga's store, unlucky who hasn't got it yet (like my home city!).

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