Cost is the most important competitive priority for a discount store, such as Zellers. In order to perform competitively as a discount store, the organization must emphasize low operating costs. With this priority, Zellers can produce at low costs in comparison to competitors and offer products at low prices in order to meet consumer needs and become an order winner.
2. Three generic strategies are low cost, niche market, and product differentiation. What one of these strategies was Zellers using before 1998? After 1998?
Prior to 1998, Zellers was using a low cost strategy. The company targeted budget-minded consumers with the slogan "Where the Lowest Price is the Law." In the face of fierce rivalry from WalMart entering the competitive landscape and various operational shortcomings, Zellers made several strategic decisions and changes. After 1998, Zellers was using a niche market strategy, by adjusting its mission to become a "mom's store." Zellers focused on offering fair value to consumers, as opposed to the lowest price. The company moved away from the low cost dynamic of its self-service policy by investing in labour, having several customer service assistants on the floor. It also focused on investing in more famous brands and private label products. To the company's detriment, it appears that Zellers made these strategic changes in order to compete more directly with WalMart, as they moved away from discounts towards offering everyday low prices on 95% of its merchandise.