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Pattern description
Pattern description
A company sells a large variety of readily available products and accessories under one roof. Generally, the assortment of products is large but the prices are kept low. More customers are attracted due to the great range on offer, while economies of scope yield advantages for the company.
Inventive problems
Inventive problems
It is necessary to invest in new products development in order to create the new products.
There is no need to invest in developing new products in order to reduce costs.
Assortment should be broad to attract more buyers.
Assortment should be narrow to reduce production and sales costs.
The customers should visit as few places as possible (it's the best - one place) for shopping, so as not to waste time on visiting companies or stores.
The customers should visit many different places (shops, companies, Internet sites) to find the products that most suitable for them.
Application examples
Application examples
Today, we are very much used to groceries being sold in supermarkets, but the Supermarket concept has inspired a variety of business model innovations in other areas. For example, Merrill Lynch introduced the ‘financial supermarket’. Within its umbrella company, it offers a wide range of investment products and services for private and corporate customers. The goal is to reach as many investors as possible so as to increase trading volume. Merrill Lynch founder Charles Merrill thought of the idea after gaining experience as an actively involved investor for the supermarket industry. The notion of bringing the Supermarket concept to the financial world spurred Merrill Lynch to introduce a variety of measures that would provide average Americans access to the hitherto elitist investment business and in some ways ‘democratise’ it. The bank advertised extensively in daily newspapers, provided training, established a countrywide network of branches, and, in the 1970s, introduced the Cash Management Account system.
Toy retailer Toys R Us also implemented a Supermarket-based business model. Founder Charles Lazarus, just like Merrill Lynch, wondered how he could bring the success of the Supermarket pattern to the toy industry. He came up with a solution at the end of the 1940s: Toys R Us, the first toy supermarket. In contrast to other players in the industry that focused on boutique stores with a narrow product range and higher prices, Toys R Us built a Supermarket concept that offered customers a wide variety of toy products at lower prices in larger stores. Therefore it benefited from global scope and was able to offer lower prices than competitors, so attracting customers and increasing revenue and profits. Toys R Us operates over 2,000 stores in more than 30 countries worldwide.
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