February 9th, 2009
04:09 PM GMT
Share this on:

LONDON, England – You might think Pablo Dimoglou was a little crazy when he decided last year to launch a new grocery store just a mile or so away from one of the biggest Tesco supermarkets in the UK.

Dimoglou has made a success of underselling superstores.
Dimoglou has made a success of underselling superstores.

Dimoglou had had enough of his career in the events management business and decided to open a farm shop selling local produce from farmers around Norfolk, eastern England. So he and a partner set up shop, literally, and it didn't go well. Bags of fresh carrots sat for days and were then thrown away. Potatoes just sat on the floor.

Even though he was providing an alternative to the big Tesco and was trying to help local farmers, his set up did not interest many local suppliers because sending over a few bags every week was not worth the effort.

But he did not give up. He went to Tesco and checked out the prices and decided to undercut the superstore on most vegetables.

After failing to interest the local media with his strategy, he put 5,000 leaflets through the doors of neighbours and put a big sign out front stating "Cheaper than Tesco." It worked.

It seems customers do not care where the food originates or who sells it - they want lower prices, period.

On many days Pablo goes to Tesco and does a price check and then shows customers which products are cheaper at his place. On the day we were there, Tesco onions were cheaper and he clearly displayed that.

Now, suppliers gladly deliver whatever he orders. He is selling many more bags of carrots and sacks of potatoes and has added non-grocery items so customers don't have to head up to the superstore for items such as staples, even if they are a little cheaper there.

His business model is simple: Instead of trying to sell (or not) something at a 50 percent mark up, he now sells a whole of something at a 10 percent mark up. He still makes his money, his suppliers are happy, his parking lot is busy and now Pablo is building a summer restaurant on site so people can sit and watch the traffic head up the road to Tesco.

He figures by this summer, he will have nine employees. Nine people who would not have a job if he did not undercut his rival.

Do you have any similar examples where you live? Let us know.

Posted by: ,
Filed under: BusinessRetail


soundoff (12 Responses)
  1. ho

    good 4 u :)

    February 9, 2009 at 7:11 pm |
  2. Nwosu Obinna victor

    Really nice idea,I guess it turned out so cause it worked.Am a young nigerian currently in my final yr in college and i'll be sure to take a leaf from this as I hope to our my own business one day,and one thing i know for sure is that there would be existing competitors.Thanks a lot.

    February 9, 2009 at 7:21 pm |
  3. annette

    Chapeau fot this guy!

    Perseverence that is life.

    In Latin America where i live they donĀ“t know what that means. They want to receive.. what do I get from you... that is the mentality of most of them.

    February 9, 2009 at 9:06 pm |
  4. Kim

    The government should do it's part to help our economy and they should get acquainted with some words that are familiar to many people. Right size; we need to right size the government. We pay a fortune for the governments benefits, including their ridiculous pension package. Something is wrong here, jobs are being cut everywhere but yet the gorvernment programs is growing. I wish I could pass laws that would ensure my job security. This "stimulus" package stinks and will do nothing but put us in further debt. So if I'm to use the governments logic I should borrow an incredible amount of money, even if I'm already drowning in debt to fix my problem. More spending is not the answer. STOP OUTSOURCING JOBS, CLOSE OUR BORDERS, CONTROL HEALTHCARE SPENDING (an asprin should not cost $14 when you are in the hospital) and last but not least STOP NAFTA, CAFTA, AND ALL OTHER LUNATIC PROGRAMS.

    February 10, 2009 at 4:53 am |
  5. Claudio Matrajt

    whow! great story. I end thinking if this `local`strategy has any correlation in the corporate business world, mean, what will be the future success of global businesses model?

    February 10, 2009 at 9:28 am |
  6. jayQ

    Lucky UK people.

    The grocery stores in California have all the unhealthy food marked down and fruit and veggies marked high......it is rare to see anyone in the meat market.

    a CAN of chili with beans cost more the without. Beans have more carbohydrates and are more in demand.

    And the media wonders why we are fat?

    February 11, 2009 at 11:34 am |
  7. Darwin (Spain)

    I did something similar 20 years ago in london.

    Opened a top class fruit shop within 200 yards of three other fruit shops and about a mile away from a huge Tescos. The three fruit shops had terrible quality, and although Tescos' quality was good, they were expensive.

    Easy peasee. I maintained top quality produce, undercutting Tesos prices. I unfortunately caused the demise of two of the fruit shops within six months – their own fault really. I recouped my initial investment within six months.

    It was actually a lot of hard work, and lot's of leaflets through doors.

    It's worth while remembering that nothing is cheap just because the price is low; a cheap item is something that you have bought that is worth more than you have paid:

    Ten bruised apples at a penny each.
    Ten good apples at five pence each
    Ten good apples at four pence each.

    Now you tell me which of the above is the cheapest. Sorry, no prizes.

    One of the morals to this story is, that you can only succeed while your competitors allow you too.

    February 11, 2009 at 5:11 pm |
  8. Muthyavan

    These family run small grocery stores are helpful to consumers in small towns and big cities for urgent quick purchases. If you need a packet of cigarettes or a bottle of drink when you are on the roads you can just walk into these stores buy it and walk out in no time. When you walk into a departmental stores or a super market to buy these quick purchases you will have to spend more time looking for it then pick it up and wait in a Que sometimes to pay for it. Individually run small business always have a place in today's societies side by side along with big super markets, but their success always depends on punctuality of operations, prices and the type of important things to humans they market.

    February 11, 2009 at 10:46 pm |
  9. Wotuseek.com

    Love real stories of the small business guy taking on the large players.

    We are the same Wotuseek.com is a small Family Friendly Search Engine taking on the Googles of this world. Last time I heard Google has 87% of the search market. We have far less than the 1%

    All of us taking on the big boys need to find a way of being better, cheaper, more relevent or more ethical .

    One thing I have learn't in my time in all sorts of business bigger is very rarely better.

    Again great story

    February 13, 2009 at 10:51 am |
  10. Gabriel McKinsey

    Great story and nice strategy.

    Perseverance, street smarts, and willingness to try different things, together with no fear of the "big names" can make us go a long way.

    Just another case to show that anyone can thrive, or at least survive, in any economy, anywhere.

    Gabriel McKinsey
    Intercambio Cursos Exterior

    February 15, 2009 at 11:11 pm |
  11. icons pack

    I know, to you here will help to find the correct decision.

    November 4, 2012 at 1:50 pm |

Post a comment


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

 
 
Powered by WordPress.com VIP