Budgens plc: coping with competition in UK grocery retailing Available to Purchase

Five years ago, Budgens plc, Britain’s tenth largest grocery retailer, established an alliance with REWE of Germany to develop a discount format in the south of England ‐ Budgens’ heartland ‐ to exploit what was perceived as a growth area in the UK as the other multiples had tended to vacate this sector of the market. Budgens had no experience of discounting and thus an alliance with REWE, a large German discount operator, was an attractive proposition. The article explains why and how the alliance developed and, importantly, assesses why the experiment was relatively short‐lived. Essentially, it illuminates the problems of attempting to pursue both differentiation and cost/price leadership strategies.