Introduction to ALDI, Retailing Perspective, Competitors of ALDI, Economic Analysis of ALDI's business practices, Challenges to ALDI.

4. Challenges to ALDI

5. Are they facing a THREAT?

6. ALDI the Market Leader?

7. Introduction To ALDI
First store opened in 1913 in
Germany
By brothers Karl and Theo
Albrecht
Leading global discount
supermarket chain
Has over 8,000 stores
worldwide
High quality products and
excellent value for customers

8. ALDI’s Core Values
Core Values
Simplicity Consistency Responsibility

9. ALDI plans to grow by 16% a year

10. Challenges to ALDI

11. How did ALDI start?

12. ALDI the home of Lowest Prices.
In some cases Aldi’s products are 30%
cheaper than those offered by its
competitors.
BUT HOW?

13. ALDI is successful not because its cheap,
but because it offers consistent quality
How?

14. Retailing Perspective
• Sell goods and services to ultimate customers.
• Contribute to consumption than reselling.
• Middlemen or intermediaries.

15. Innovation
Time
OperatingandGrossMargin
Entry
TradingUp
Vulnerability
Entry
TradingUp
Vulnerability
Retailing: Wheel of Cycle

16. Innovative
retailer:
Low price
Low status
Limited product
offering
Traditional retailer:
Elaborate facilities
Higher rent locations
Extended product offerings
Mature
Retailer:
Conservatism
Declining R.O.I
Top heaviness
Entry phaseVulnerability
phase
Trading up phase

17. Retail Accordion
Wide Variety Retailers
(Many Merchandise Lines)
Limited Variety Retailers
(Few Merchandise Lines)
General
Store
Speciality
Store
General
Catalog
Bakery Shop BoutiqueShoe
Store
Departmental
Store
Speciality
Catalog
Supermarket Hypermarket

18. Consumer Surplus

19. K2
L
1
L
2
K
1
Labor
Capital
MRTS
Marginal Rate of Technical Substitution (MRTS)

21. BL1 BL2
Food
Clothing
IC1
IC1
Shifts the IC curve downward so that it can be
obtained by BL1

22. Price Elasticity of Demand

23. ALDI: The Economic Man Model
Time Spent in
Purchase Decision
Extensive Comparison
Shopping Impulse Buying
More Low
Factors Affecting Deliberation:
• Cost of Purchase
• Urgency of Purchase
• Personality of Buyers
• Persuasiveness of the Seller

24. Nature of Competition
• Intra type Competition
• Intertype Competition

25. Porter’s Analysis: ALDI

26. Generic Strategy: Cost Leadership
• Product Strategy
• Simplified Operations
• Organization Structure
• No frills
• Supply Chain Management
• Employee Development Programme

27. • Majority of private brands.
• Strong competitors.
• Limited promotion.
• Relation with many vendors.

28. Morrison
• Price reduction of 17%
• Enhancing service and making stores environment
pleasant.

29. Wallmart
• 1.25 billion products to reduce prices even more(5yr strategy)
• Investing in quality design and style
• Revitalization of stores
• Wide variety products.
• Shallow investment.

30. Lidl store vs Aldi store

31. Inside ALDIInside Lidl
Inside Walmart

32. Customer
perceived
added
value
Assortment:
-Coherence and coordination
-Width, depth, availability, continuity and
range building
-Quality
-Service products
Ambiance
-excitement, convenience
-Effectiveness
Staff
-Number
-Ability
Support

33. Competitive Advantages Over Aldi
• Market saturation of Aldi
• Allowance of credit cards
• Customer satisfaction and services(delivery)
• Interacting with customers(handling phone complaints)
• Penetrating market through advertisements
• Expanding business locally and in foreign markets(threat of new
entries)
• Encouraging increased use by existing customers.

34. • Big four company still occupy commanding
heights
• Tesco 28.2%
• ASDA 16.7%
• Sainsbury’s 16.2% Morrisons 10.7%
• Aldi only has 5.6%
• Lidl 4.2% entire UK Grocery

35. Is Aldi really cheap?
The 15 items include 4 pints of semi-skilled milk, 6 large free range eggs, 1 loaf of Kingsmill 50/50 medium sliced, 1 pack of large
vine-ripened tomatoes, 350g of medium cheddar cheese ,250g salted butter, 1 bunch of organic fairtrade bananas, 4 x 125g
Optifit fat free yoghurt, 900g frozen peas, 10 pack of fish fingers, 1 whole fresh broccoli, 500g of penne pasta, 500ml of
washing up liquid, 500ml of antibacterial handwash, 9 toilet rolls.

41. Aldi Whole Foods
1 pound organic baby carrots,1 pint of organic grape tomatoes, 1 pound of bananas, 3 pounds
of apples and 16 ounces of spring mix
$15.44 $23.50
1 pint blueberries $2.99 $3.99
1 pound strawberries $1.79 $3.99
1 pomegranate 99 cents $3.99
Beef $5.89 per
pound
$7.49 per
pound
Organic Milk $2.95 for 64
ounce carton
$3.99 for 64
ounce carton
Non-diary milk $2.19 for 64
ounce carton
$2.99 for 64
ounce carton
32 ounce organic vanilla yoghurt $2.99 $3.49
Organic grains (16 ounce package) $2.99 $6.99
Organic Fair Trade Coffee (12 ounce bag) $4.79 $11.99
Organic Oils (16.9 ounce bottle) $3.99 $7.99
Glutten Free multi seed crackers (4.25 ounce package) $1.49 $3.69

42. Checkout Process
• Whenever I head towards a particular checkout the assistant will often direct me to the next one down which
invariably has a longer queue by the time I get there. It's annoying for sure, but by no means my biggest gripe
with the checkouts at Aldi.
• My main gripe with Aldi is the checkout process itself. It's very fast, but it's certainly not fun and I'd imagine this
streamlined approach is one of the reasons they are doing so well and can offer such good prices. They seem to
have their people doing everything and only serving customers when enough of them turn up at the till, hence the
'queue shuffle' I suppose.
• They scan your shopping at an unbelievable rate ... and I don't like to be hurried along.
• I think the cashiers have been specially trained as they scan your shopping at an unbelievable rate. One of my pet
dislikes is when a cashier starts scanning the shopping of the next customer before you've had a chance to pack all
your items away. It just feels rude and I don't like to be hurried along. As it happens I don't dither with my
shopping like some people do and I have a small bag. I usually only buy a handful of things but even with that I
can't keep up with the Aldi cashiers when they're on a mission!
• I get the impression they don't really want you to pack your bag at the checkout either, preferring instead that you
grab everything and go pack your bags in the area just beyond.
• One more thing. They don't have hand baskets, only the trolleys where you need to put in a pound deposit. I
often don't have change and find myself wandering around the shop trying to hold on to everything whilst
grabbing the last couple of bits and preparing to join the rest of the cattle at the checkouts.

43. Customer Satisfaction

44. Low Price, Low Quality

45. Problems
• Wheel of Cycle- Ajay
• Market saturation in Germany-Natasha
• Will the same business model work in the international
market- Anu
• Growth of Lidl- Natasha
• Customer satisfaction-Dipesh
• E-commerce-Anu
• One supplier dominance-Hannah
• Employee Dissatisfaction- Dipesh

46. Market Saturation in Germany

47. Revamp Expenditure
• Revitalization of 1300 U.S. Stores
• Revamp expenditure of $ 1.6 Billions
• Price still low.

49. Will the same business model work in
the international market?

50. Growth of Lidl
• Discounter that cared about customer
satisfaction

51. E-commerce

52. One supplier dominance

53. Sustainable Business Strategy

58. Graduate Employee Program
GrandConnection Ratings:
• Top FMCG Graduate Employer 2017 in Australia.
• Fifth most popular Graduate Employer across all
industries.

61. ALDI UK
• Supermarket of the Year 2012 and 2013
• Grocer of the Year 2013
• April 2015- Sixth Largest Supermarket Chain
• February 2017- Fifth Largest Supermarket Chain

62. Current Scenario

63. Sustainable Solutions to ALDI

64. Objectives
• Economic analysis of ALDI’s business practices
• Strategy Assessment
• Cost Classification
• Today’s ALDI
• Challenges to ALDI
• Solutions to ALDI