As a student living in Glasgow in mid 2000s, it always frustrated me when I couldn’t find a particular brands that I like at the local Aldi. Now I understand why. It was Aldi’s conscious choice to stock limited SKUs and offered staggering amount of its own brand in order to maintain the deep discount it offered on the products. As we learnt in Marketing, store brands offer the highest margins and Aldi provided the best selection of everyday goods for customers who are price sensitive and brand agnostic.
It is really interesting to know that Zara’s choice to own some of its factories and outsources its remaining production to nearby location fits really well for its emphasis on upscale quality without inflating its production cost too much. Whilst most clothing companies choose to outsource their operations to Bangladesh, India, and China, Zara avoided this approach (and reputational risks associated with the working conditions of factories in these countries) with its strong value proposition as an affordable upscale brand.