A question about the cost-effectiveness of actions.
Action Germany's Affordability Strategy: A Low-Price, High-Volume Approach
Action, the well-known discount store, has established itself as a go-to destination for price-sensitive shoppers. Heiko Großner, General Manager of Action Germany, confirmed that the company keeps an eye on actions and discounts from competitors to maintain its position as the most affordable provider.
The secret behind Action's affordability lies in its strategic pricing approach. The store prices its products significantly lower than competitors, often by leveraging bulk buying, supplier negotiations, overstock acquisition, and private-label offerings. This strategy attracts customers looking for essential goods at low prices, helping Action achieve high sales volumes and market share.
Discount expert Marc Houppermans, who works for several companies and advises globally, highlighted Action's varied product range. The store sells both no-name products and well-known brands at affordable prices, making it a one-stop shop for many customers. An example given is Lego products, which are sold at lower prices at Action, often older model series that may be hard to find elsewhere.
Action's discount pricing strategy involves several tactics:
- Economy pricing: Pricing items cheaply to drive volume sales, especially suited for commodity-type goods with low production costs.
- Competitive pricing: Pricing just below competitors to lure customers when many substitute products exist.
- Promotional pricing and bundling: Offering temporary discounts and product bundles to increase sales and perceived value.
- Use of overstock or close-to-expiry products from leading brands along with private-label alternatives to keep costs down.
Action's product range mainly includes everyday essentials and non-crucial items, such as snacks, beverages, pet food, household goods, cleaning supplies, toiletries, and seasonal items. These products are priced to appeal to budget-conscious shoppers.
Action is known to many customers as a bargain paradise. For instance, Helium gas costs 17.99 euros at Action, while it costs 12 euros more at competitors like Globus. If Action cannot offer an item at the same price as others on a permanent basis, they would stop selling that item, according to Großner.
In summary, Action's affordability is driven by a low-price, high-volume model rooted in discount and competitive pricing strategies, complemented by sourcing practices like bulk buying or overstock acquisition. Its primary product offering revolves around everyday consumables and household staples provided in formats that maximize cost savings for the customer.
The discount store, Action, maintains its position as the most affordable provider in the retail industry by monitoring competitor discounts and implementing strategic pricing tactics. To attract budget-conscious shoppers and achieve high sales volumes, Action employs a low-price, high-volume model that includes economy pricing, competitive pricing, promotional pricing and bundling, and the use of overstock or close-to-expiry products in their business strategy.
