Sunday, July 26, 2015

Bottom Dollar Food Drowns in a Red Ocean

Bottom Dollar Food, a discounted grocery store, arrived in the Pittsburgh area in 2012. Just three short years later all 20 Pittsburgh locations would close their doors for good. Why? Competition. Bottom Dollar was competing in an overcrowded industry, a red ocean.  The competition included Giant Eagle, Walmart, Big Lots, Save-A-Lot, Shop ‘n Save, and Aldi.  Delhaize Group, Bottom Dollar’s parent company, announced in November 2014 that they were selling the Bottom Dollar chain to Aldi.  All 66 Bottom Dollar stores officially closed in January 2015.  What could have Bottom Dollar done differently? Bottom Dollar needed to create and use a blue ocean strategy.  The strategy, created by authors W. Chan Kim and Renee Mauborgne, describe blue oceans as “uncontested market spaces where the competition is irrelevant. In blue oceans, you invent and capture new demand, and you offer customers a leap in value while also streamlining your costs” (p. 2).  I believe Bottom Dollar had the right idea but perhaps did not have the right location.  The Pittsburgh area was already saturated by many grocery stores and Aldi was already dominating the area.  Aldi was too similar to Bottom Dollar, both being discounted grocery stores. “Competing in overcrowded industries is no way to sustain high performance” (p.3).  Bottom Dollar needed to create a blue ocean in order to stay afloat.  

Heather, Abraham. "Bottom Dollar Closes For Good In Pittsburgh." CBS Pittsburgh. 13 Jan. 2015. Web. 27 July 2015.

Kim, W. Chan, and Renee Mauborgne. Blue Ocean Strategy. Boston, Mass.: Harvard Business Review, 2004. Print.

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