The German drugstore Schlecker will be leaving the Dutch market. The price fighter faces decreasing revenue and decided to close all stores. Recently we have seen quite some companies aiming at price competition close their doors. Although it always has been argued that this strategy is not sustainable, it is interesting that it becomes clear in these economic times. On the one hand you might expect that buyers are more price sensitive and turn to these discounters. One the other hand the business models depending on low margins and high turnover are high risk in these times.
From studying succesful companies it becomes clear that applying a hybrid strategy is the way forward. Generic strategies like the ones described by Porter are to limited to stay competitive in the current competitive landscape and economic climate. Succesful organizations adopt a combination of competitive aspects to build a Hybrid Strategy. Examples are: IKEA (differentiate in design + low cost), Toyota (quality – although under pressure + price) and Ahold (quality + price). Just competing on price isn’t good enough anymore. Therefore we enter an interesting new era of strategic management in organizations.