Aldi

Presented by
Lokesh
Kishor
Neelandra
Ravi
Sandeep
Introduction
• ALDI - short for “Albrecht Discount”
• Third largest retail chain in Germany.
• The chain is made up of two separate groups,
– ALDI Nord (North – managed by Theo Albrecht)
– ALDI Süd (South – managed by Karl Albrecht)
• Major Competitors
– Lidl
– Metro AG
– Rewe
– Edeka Group
Introduction (Contd.)
• Aldi's operations currently consist of :
– Aldi Nord
• 35 individual regional companies with about 2,500 stores
in Western, Northern and Eastern Germany
• Operates in Denmark, France, the Benelux countries, the
Iberian peninsula and Poland
– Aldi Süd
• 31 regional companies with 1,600 stores in Western and
Southern Germany.
• operates in countries including the United States, Ireland,
the United Kingdom, Hungary, Greece, Switzerland,
Austria, Slovenia (operating as Hofer in Austria and
Slovenia) and Australia.
Factors Influencing Retail – 1940s
Mission & Vision
• Mission
– "ALDI promise” - Top quality at incredibly low prices -
guaranteed.

• Vision
– To revolutionize the grocery industry with a unique
business model – a model that is able to provide the
highest quality products at the lowest prices.
– The value that is offered to the customers would stem
from the numerous efficiencies and innovations
instituted at every level of operation.
Aldi’s Values
• Keep it simple
• Strive to earn your customer’s trust
• Set clear goals and follow then strictly
• Don’t optimize, maximize
• Know where you stand, but don’t waste time on budgets
and figures
• Test now perfect later
• Be fair to your suppliers and help them improve their
business
• Practice management by trust and control
• Talk in terms that people can understand
• No matter how successful you are, stay thrifty and frugal
Aldi’s Concepts
• To be able to offer the cheapest possible goods
they rely on simplicity and efficiency.
• Some of the common features of an Aldi store.
– Limited assortment.
– "There's no such thing as a free carrier bag"
– Don't try the phone book
– Deposits for shopping carts
– Few shelves.
– Not open 24/7
Business Model - Product
• Aldi stock 700 products.
• Each product category has only one brand & a restricted
variety.
• Only 15% are the national brands rest are private labels.
• No compromise with the quality
• Private labals are as good as the established brands.
• Private labels are produced by well-known brand
manufacturers.
• Limited products, stronger control on the quality & price.
• Limited products also eases shipping & handling.
• Surprise buy
Business Model - Price
• Aldi was managed solely on the basis of lowest price.
• Act as a hard discounter .
• Aldi would sell its products at a significantly lower price than
that of the national brands.
• Provides value for money.
• Aldi is able to keep low prices by
– Buying in bulk
– Cut in store cost.
– Save warehousing cost.
– Remain closed on Sunday and bank holidays
– Expansion with its cash flow.
– No frills, no aisle decoration.
Business Model - Place
• Aldi stores are generally 15000 sqft.
• Aldi’s product variety is limited
– customers spend less time to pick up their
merchandising
– Makes movement easy and quick.
• Keeping the store small also make the choice of a
site easy.
Business Model - Promotion
• Aldi spends minimum on marketing and advertising i.e., less
than 0.5% of its annual turnover.
• Aldi has traditionally relied on catalogues, local press
• Advertising by word of mouth.
• Used a small weekly newsletter called Aldi Informiert (Aldi
Infoms) – informing about special buys
• Weekly newsletter sometimes printed in local newspapers.
• They have also delivered the full color leaflet used in store
to householders' letterboxes in store localities.
Value Chain Analysis
Firm Infrastructure –15,000 square feet area per store

Human Resources: Only three employees per store, paid twice the
Salary as compared to other supermarkets.
Technology: Were using two sided barcode scanner.

Procurement: Did a strategic alliance with one vendor to provide the goods
On low cost.

Inbound Operations Outbound Marketing Service

Logistics Limited Logistics & Sales Double
Vendor assortment Customer Low price was guarantee.
replenish (700) . Dry need to pay the
goods at Products . 90 for bag, advertisement
regional % private manage Carts, . In UK,
logistic labels. no baggers. newspaper
centre, which Stocking fast Arrange their insert and
supplies to moving shopping aired some TV
all the stores goods in only themselves commercials.
in 50 Km one size. once the
radius. billing is done.
 Cost effic ient
Priv ate label sourc ing
Pric e edge over other ret ailers
Strong dome stic position.
D eep poc k ets of parent company

Range adapta
Decentralize d st ructure.

Opportu
Expand i nto othe
Increase market p
Devel op town cent

Hold tight to lowest co

Relationships with brand
SWOT Analysis

SWOT

Changi ng demographics
Soft discounters.
Other global retai lers’ discount formats.
Price competition.
markets.
Manual sy st ems

Cust omer serv

Reli ance on one format i

Dependent on well t rai

Limit ed assort ment , li m
Weakness

Threats
International Expansion
Aldi expanded internationally in
– Aldi Nord operates in
• Denmark
• France
• The Benelux countries
• The Iberian peninsula
• Poland
– Aldi Süd operates in
• United States
• United Kingdom
• Hungary
• Greece
• Switzerland
• Austria & Slovenia (Hofer)
• Australia.
International Expansion
• Followed the same strategy as in German operations with
minor changes
• Faced difficulties with the business model
– Consumers in Ireland did not like no-frills model
– Irish consumers were not price consious
– Consumers in some countries wanted more product variety
and assortments
– Preferred products attractively laid on shelves
Competitor Analysis - LIDL
• Lidl discount store was set 1970 on Aldi’s
concept
• Differed from Aldi in
– Positioned as discount store that cared for
customer
– Was not completely no-frills
– Larger stores
– Larger product assortment – about 1200
– Stocked more branded products than Aldi
– Stayed open for longer hours
Competitor Analysis - LIDL
• Lidl grew by 13% in Germany and 17% in Europe.
• More than half of the turnover of Lidl came from overseas
operations.
• Lidl was was planning expansion in (where Aldi did not exists)
– Canada
– Croatia
– Estonia
– Latvia
– Lithuania
– Romania
– Slovenia
– Switzerland
– Bulgaria
Factors Influencing Retail – 2000s
Porters Model – Retail in Germany and Europe

• Threat of new entrants - High

– New global retail players
• Threat of Substitute – mediun
– Online retailing format
• Rivalry among existing players – High
– Lidl
– Metro AG
– Rewe
– Edeka Group
Porters Model – Retail in Germany and Europe

• Power of Buyers – High

– Consumes prefer low cost
– Consumes prefer good service.
– Consumers prefer stores with additional features
than regular stores.
• Power of suppliers – Low
– Retails stores in price war with competitors
– Low cost suppliers preferred
Future Growth Suggestions
• Aldi can venture into
• Online Retailing
• Home Delivery by taking orders on phone
(Customers using printed catalogue) and
home delivery.
• New Store format by creating Aldi town
center and providing features like Spas and
day care for making the shopping
experience enjoyable.