Array Analysis

Array analysis is a tool to estimate a company's standing as compared to its competitors in a particular sector. For our case, the biggest competitors for food and beverages market of Carrefour are Lidl and Aldi. The comparison is done on the basis of certain key factors that are substantial to succeed for a company in that sector. These factors are rated(0 to 1) according to their significance and then a company is graded according to its position with respect to the specific factor. The array analysis for Carrefour and its main competitors Lidl and Aldi is given below.

*The weights assigned are subjective and based on the data collected through primary and secondary research.

From the array analysis we can conclude that the primary concerns of consumers while visiting a food and beverages store are perceived quality of the product, the value for money the product provides and the proximity of the store to the consumer. These are the major criteria for a consumer to visit a store. The other key factors are the diversification in the product portfolio of the store, the after sales service provided by the store, the brand image of the store. There are certain other factors also which are on the mind of consumers before visiting a store such as Marketing campaign run by the store and the ease of shopping inside the store.

ARRAY ANALYSISCARREFOUR ALDI LIDL

Critical Success Factors

Weight Rating Score Rating Score Rating Score

Quality of Products 0.2 4 0.8 4 0.8 3 0.6

Value for Money 0.2 3 0.6 4 0.8 4 0.8

Proximity to the Consumer

0.2 3 0.6 2 0.4 4 0.8

Product Portfolio 0.1 5 0.5 3 0.3 3 0.3

Service & Convenience

0.1 4 0.4 3 0.3 3 0.3

Marketing & Advertisement

0.05 4 0.2 3 0.15 3 0.15

Perceived Brand Value

0.1 5 0.5 4 0.4 3 0.3

Customer Loyalty 0.05 4 0.2 3 0.15 3 0.15

Total 1   3.8   3.3   3.4

Now, as evident from the array analysis, Carrefour has a very high score on quality of products and the product range it provides. While, Aldi and Lidl are seen as a better store considering the value for money by the products and the location of the stores. But when seen the overall score Carrefour is leading on the critical success factors then its immediate competitors Aldi and Lidl which ironically is in contrary with the current market situation. The sales data as available for the food and beverage range of the stores has indicated that the store is losing its market share in the last few years to Lidl, Aldi and other small chains coming up like Super U.

The explanation of this contradiction, based on the primary research, is that the buying habits of consumers when visiting a store are relatively random when compared to what they perceive about the store before entering it. Also, the mystery shopping and chatting with randomly selected customers inside the stores has shown that the major decision criteria for the daily shoppers is based on the price offering of the product. Infact, buyers even are not shy of putting aside the brand image of a store and go for the most visible and price lucrative product.

IFAS Analysis

The IFAS analysis for the three companies has been done separately considering the secondary data available through the Retail Magazines and previous reports prepared by various consultancy organizations. The strength and weakness of the three companies differ according to their business model and core competencies. Thus the IFAS has to be done separately.

The analysis shows that Carrefour has evident advantages over Lidl and Aldi when we consider Economies of scale, brand awareness and their multiformat presence. But it also has some weakness which it needs to work upon. The significant ones are high cost of expansion and high maintenance cost due to its large stores and huge inventory. The other weakness is the dependency on French market to a huge extent. This was evident from the fact that when

ALDI Weight Rating Weighted Score

STRENGTH

Hard discount model 0.15 4 0.6

Low cost small stores 0.15 3 0.45

High quality at a low price 0.25 4 1

Warranty Aldi (ALDI News items) 0.1 3 0.3

WEAKNESS

Brand Awareness 0.1 2 0.2

Customer Loyalty 0.1 1 0.1

Limited product portfolio 0.1 2 0.2

Paternalistic Style 0.05 2 0.1

TOTAL 1 2.95

there was a slow down in the french economy Carrefour was the biggest loser while Lidl and Aldi managed to get away with it because of their footholds in other countries as well.

The main strength of Lidl and Aldi is their hardcore discounted model that they have incorporated in their business model. Also they both have smaller stores thus they don't have to incur a huge investment for opening a new store. Although the IFAS analysis of Aldi and Lidl one with an idea that they both have same business model but there is a major difference in their business strategy. While, Aldi makes a product pool on the basis of quality and then select the product having the lowest price from that pool for its stores. Lidl, in contrary makes the pool of product on the basis of price and then selects the product having the best quality out of that pool. Apart from this the other strengths of Aldi and Lidl are warranty programs and lesser number of SKU's respectively.

Amongst the weakness for Aldi and Lidl the main ones are their low score on brand awareness as the french people are still not so much passionate about these foreign brands, their lack of customer loyalty programs and their high dictatorial style of management. This means that management at Lidl and Aldi are not so open to feedback from their staff and customers. Lidl amd Aldi both have a very limited product portfolio which sometimes work to their disadvantage as well. Apart from these there are also some quality issues commonly asscoiated with Lidl.

Thus on the basis of this IFAS analysis we again have Carrefour as a clear strong hold in between the three companies, which contradicts with the current market condition. So, lets do the EFAS analysis and see if that can help us explain this paradox.

EFAS Analysis

The EFAS analysis has been done for Carrefour in one place and Aldi and Lidl together at other. That is because the business model and size of operation is completely different from Carrefour from other two, which almost follow the same business model.

Carrefour Weight Rating Weighted Score

OPPORTUNITIES

Growing food and beverages market in France

0.15 3 0.45

Demographic Diversity 0.15 3 0.45

Latest Technology 0.1 4 0.4

THREATS

Heavy Price Competition 0.25 2 0.5

Wal-mart can enter france 0.1 4 0.4

Liberalization of Laws 0.15 2 0.3

Not much scope for acquisition 0.1 2 0.2

TOTAL 1 2.7

This analysis shows that the opportunities for Carrefour are the growing food and beverages market in France, which grew by almost 3% and is forecasted to grew even more in the forthcoming years. Also, the inclusion of technology in business by big players outside France can also be done by Carrefour as well. But, the biggest threats to Carrefour's business is the chances of Walmart making an entrance in France. Also with the liberalistaion of government policies the implictaions on foreign players to enter french market are uplifted to a great extent, which is again a threat for Carrefour.

Then the opportunities for Aldi and Lidl are similar. They both can take advantage of the growing market in France. Then they both can introduce customer loyalty programs in their business structure to create brand awareness. Also, the threats for Aldi and Lidl is the potential chances of entrance of Walmart in France. Also, if the government of France decided to tighten their trade policy for foreign players, these two will suffer badly.

Thus after analysing the external factors we can conclude that while Aldi and Lidl are doing good to capture on the opportunities and mitigate the threats from external environment. While Carrefour is lacking in this aspect, thus it is not foreseeing the danger to its market and is following a complacent policy which might be the reason for the loss of market share to Lidl and Aldi.