• You will hear a college lecturer talking to a class of business students about

Man: Good morning. In today’s class we’ll be comparing two supermarket chains whose futures are looking very different at the moment. First of all, the Williams chain.
      Sharon Tucker joined Williams two years ago as Sales Director, taking over as Chief Executive three months later. The company was struggling. Sales growth was fading away, and profits were falling. Its strategy of focusing on redesigning stores was doing nothing to boost sales. In short, Williams had lost its way.
      After just one year under Tucker’s leadership, it’s regained its confidence, and with good reason. Sales have been rising for fifteen months, starting almost as soon as she walked in the door. They’re up by five per cent in the last six months, excluding new space, with profits over the same period rising by ten per cent. And the company claims to have attracted a million new customers.
      Tucker came from the American chain Hurst’s, and her experience there persuaded her that everyday low pricing, the strategy pursued by that giant and by most of the British supermarket groups, wouldn’t work for a small player like Williams. Its larger rivals could too easily undercut it.
      Instead, she decided to use a high-low strategy, which is generally known as loss- leading. The technique’s familiar: cut the price of twenty or so selected items each week. The radical part came in the implementation. Instead of making it a national campaign, which would allow Williams’s rivals to instantly follow its price cuts, the company’s ’best deals’, as they’re called, vary from town to town, and change every week. The company employs five thousand distributors in order that, every week, a third of all the people living in the catchment area of a Williams store receive flyers through their doors, detailing these special offers. The price cuts are dramatic, like forty per cent off breakfast cereals, the same off bars of soap, fifty per cent off soft drinks, and so on. Indeed, many items are sold at below the cost to Williams.
      Shoppers seem to love it, as is evident from Williams’s sales. But it’s high risk: sales have to increase by enough to limit the impact on profits, and they have to be able to deliver the goods. That’s harder than it sounds. Some of the products on offer fly out of the door, selling as much in a week as they normally would in a year. Organising adequate stock levels for that, on different products around the country, is a nightmare of logistics. What makes all this feasible, apart from very good planning, is that Williams’s distribution system isn’t centralised, unlike some of the other supermarket chains.
      Williams has just passed the first anniversary of its promotional campaign, so it’ll be more and more difficult to keep sales rising. But the company’s working hard to keep the momentum going with a renewed focus on fresh produce, having been tempted in recent years by clothing and electrical goods, which are both in highly competitive sectors. The company has also promised longer opening hours at their stores in order to increase convenience for their customers.
      Now let’s compare Williams’s success with one of their suffering rivals...