Global Strategy Case Study

The reputation and recognition make Aldi attractive in the marketing activities and this aspect needs to be improved in the future to compete with both existing and forthcoming rivals. Meanwhile, the high buying power and costs control would help Aldi to diversify its products and increase market penetration to serve diverse Australian population. This leads to the reconsideration of Aldi’s current strategy of limiting product range to adopt other strategies as a number of differentiation strategies has been used by other

ALDI claims that when you shop at ALDI, you can always count on finding products that are consistently equal to or better than the top national brands in quality and taste, for up to 50% less than at traditional grocery stores. ALDI claims that by shopping at their stores, one can save an average of $115 a month on family’s groceries on staples like fresh produce, milk, bread and eggs.

As Aldi has already established itself as a large discount supermarket chain with over 10,000 stores in 18 different countries including Australia (2001), and holds a large market share in the grocery world due to its business culture and market leading initiatives. This report aims to provide the ALDI board of directors with:

1.3 Physical Resources & Capabilities The ALDI brothers took over the family business of their parents in 1946. World wide expansion led to enormous growth. This comprises around 9800 stores (1000 to 1500 SQM each). The layout is simple with wide ails designed to refill shelves in the fastest, most convenient way {Brands, D. 2003}. They offer a small assortment of mainly fast-moving items (approximately 700 food – including a slim and organic line- and non food products). Small warehouses are located at the back of each store. Affiliates are equipped with limited technology such as intelligent cash systems high-end product concerning quality and price and bottle deposit machines. ALDI won the 2008 energy management award for great results in terms of cooling systems, illumination etc. Most stores have about 100 parking space and a shopping cart area near the entrance. ALDI has a long history which implies that they have gained great experience over the years. The location and layout of stores are designed to support fast and efficient supply and not especially aimed at customer needs. This is a weakness. Stores advantageously located as there are in convenient reach for consumers. Their product range is adapted to various consumer needs (organic, healthy living). The technological equipments are of high quality enabling fast operations at the checkout (ALDI’s staff are two times faster compared with other similar operations). This is

From the time it opened, Aldi has expanded the number of product assortments that allow consumers to find nearly anything they need to supply and feed their families. Aldi developed a strong marketing program and decentralized their pricing and assortments that also include some well-known products. Aldi’s begins its value propositions to shoppers with its amazingly low prices. Their “hard” discount pricing, averages about 30% below standard supermarkets like Winn-Dixie or Kroger’s (Brick, 2016). They attribute their success and growth to the “hard discount” model as it has demonstrated to be highly effective. Aldi is different than “large” discounters like Walmart where Walmart’s varieties are limited in size and led by private label products, and investments are made in stores atmosphere, unfortunately, resulting in lackluster customer service. This allows “hard” discounters like Aldi to win the grocery price war by greater margins than Walmart, making Aldi a major competitor of Walmart (Bartone,

This report is going to present the current culture of Aldi, critically examining its current culture and possible proposal for a change in culture. It identifies the current organisational culture, its strengths and weaknesses and make recommendations necessary for an organisational culture change.

The main focus of Aldi is to offer the lowest possible price to the customer while operating their stores at the lowest cost as well. I have already stated how Aldi does not invest in advertising or any research of any kind and the main investment is in building new stores or logistics to supply those stores. But Aldi’s also uses the strategy of tricking its customers to do all the

6. Store Layout: Store layout is crucial for customers to move. Shoppers won’t need a map to navigate their local Aldi, with a 5 star rating for store lay out. Coles, IGA & Woolworths received 4 stars for their layout.

Nevertheless, the vertical value chain created by Aldi benefits the company’s corporate strategy. To be a local supplier,

Aldi’s will be expanding with 400 stores in the United States to keep up on pressure price. It is a privately held German retailer, known for cheap prices on private brand food products, being sold in rudimentary stores, has recently included inexpensive fashion to its availability. This will be a competitive factor for low priced retailers.

The Australian Supermarket Industry is the very hot topic that’s why very interesting topic now days. The Australian supermarket and grocery stores have a very severe competition in Australia mainly because of organizations competing in this mature industry are going towards cost reduction initiatives with competing advantage rather than product differentiation strategies, In other words business in this industry increase market share by charging lower prices while making reasonably fair profit. The growing popularity of ALDI – German based company of introducing its own label goods (products manufactured and sold under the retailers own brand) with low cost has forced the two giants –Woolworths and Coles to cut price

Aldi does not have a published vision or mission statement. However there is a clear set of values and business philosophy which they adhere to. This philosophy is outlined by the statement which it continuously uses, ‘Top quality at incredibly low prices – guaranteed’. In its small levels of advertising Aldi elaborates on this philosophy by stating its five main principles; huge savings, excellent quality, outstanding value, superb specials and buy with confidence. These five principles were quoted as the ‘Aldi Pledge’. This outlines there key values namely to offer their customers high quality products at low prices. This is achieved by their low cost operations, which is well known and evident throughout

According to Survey by national consumer organization, CHOICE (2014), a comparable basket of goods at ALDI is 25% cheaper than at one of the MSCs. ALDI is estimated to hold 9.1% market share in 2015-16 as compared to other grocery stores (ibis). In terms of the strategy of ALDI, ALDI focus on reducing costs to the customer in such a manner that customer is convinced to continue shopping. However, on further analysis, the organization illustrates a differentiating strategy and prefers to distinguish itself from other major retailers the likes of Coles, Wesfarmers and Woolworths. For example, ALDI provides weekly specials like on gardening, camping, kids, and kitchen with discounted offers. ALDI is a low-cost player that stocks a less variety of popular grocery items. Over past five years, an incredible achievement contributes to ALDI 's rapid growth to which consumers have responded positively (ibis). Therefore, it can be said that in terms or corporate strategy, the organization has characteristics of both a cost leadership strategy as well as a differentiation strategy.

This dissertation is submitted in partial fulfillment of the requirements for the Degree in Marketing Practice

Second, because ALDI stores are typically small they chooses inexpensive or affordable locations usually outside town or on side streets that can minimize the overheads costs that they can spend . The size doesn’t even matter as long as they can conduct their operations and provide goods and services to its valued customers. Third, they display their products on pallet rather than on shelves. They also have cross trained employees to conduct the operations within the entity, to operate, check and also replace the pallets. Lowering the price of their inputs is a way to decrease the cost. Through the methods that they use to follow they are able to achieve their low cost strategy that serves as their strength among their competitors.