Supermarket Shoppers Always Want A Bargain

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

In times of recession people tend to be very conservative when spending and the people see that ALDI offers value add to their spending by saving them money in their groceries.

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:

In the St. Louis metropolitan region there is a wide variety of grocery retailers, from which consumers purchase their groceries. With many grocery stores spread throughout the regional area offering good merchandise and competitive prices there are two chains that are frequented, Aldi’s and Trader Joe’s. Both of these companies share the same parent company, Albrecht Brothers, and have stores nationwide. Both Aldi and Trader Joe’s are owned by one company; however, they share commonalities and differences.

Promotions – Aldi uses a combination of above-the-line and below-the-line promotions with a focus on its ‘Like Brands’ and ‘Swap & Save’ campaigns.

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,

However, when Franklins unsuccessfully attempted to reconfigure their position in regards to their consumers, they lost their hold on the market (Armstrong et al. 2012). It is also outlined by Armstrong et al (2012) that the inexperience of Franklins in regards to market segmentation resulted in the loss of existing consumers as well as future consumers, and ultimately resulted in an uncontested response to ALDI. 4. ALDI’s Private label strategy Smith (2006, p. 39) implies that due to the nature of the supermarket industry, stores that offer a larger range of products are often more efficient than those that offer fewer items. ALDI however tests this notion, as they stock roughly 700 private label products - which is less than other retailers who stock 25000 to 30000 products (Bonn 2006, p. 1), yet they are still able to secure their market position and contend with rival retailers (Armstrong et al. 2012) 4.1 Perception of Private Label Within the last 20-30 years, private label brands were initially targeted towards the lower classes; therefore people’s adoptions of private label brands were not very common (Kumar & Steenkamp 2007, p. 12). However, in recent decades private label products have become more favorable to Australian consumers. This is evident in 2010 Nielson Global Survey (The Nielsen Company 2010) as the total percentage of sales of private label products have increased

Trader Joe’s is a leading firm that is taking over the supermarket industry. The company completely altered the idea of a traditional supermarket and turned it into a whole new experience for consumers. Through Trader Joe’s strategic planning, they’ve paved a way for consumers to have high-quality products while paying low prices. Trader Joe’s provides fewer products that are health-conscious, unique and privately labeled. Trader Joe’s has utilized this, secrecy, employee job satisfaction, culture and starting trends to its advantage. Within its industry companies are divided into different strategic groups. Aldi, similar Trader Joe’s strategic planning, is apart of the cultured-discount neighborhood market. This firm continues the low-stock, less-waste, small store, and low price method. A Walmart express used a hybrid strategy that made it a cross between a grocery, pharmacy, and convenience store. Tesco is the third that falls with small neighborhood markets strategy and focused on organic products, similar to Trader Joe’s. As the company grows and expands, there is caution in change of Trader Joe’s processes. With growth, there comes new management and employees which can alter the way a specific store is ran and there is worry of change in the stores normal procedures. Change that doesn’t follow the process could ultimately result in a downfall, so this can be considered a key challenge to watch in the future. Increased bureaucracy is additionally a

The threat of substitutes in the food retail industry can be high among the ‘Big Four’ as switching costs are relatively low and products can be similar. However, most have their own private labels and also target slightly different markets, such as Sainsbury’s having more upmarket positioning and Tesco’s cost leadership. Waitrose offers unique and differentiated products, which are, in the eyes of the consumer, significantly superior. No other supermarket offers such premium quality products with great service and such a large range of organic products as Waitrose, so this makes them extremely difficult to substitute. (Euromonitor, 2008).

Because Woolworths and Coles generally have homogenous products, they rely on a heavy use of advertising, in order to avoid competitive pricing with each other. Oligopolies tend to avoid competitive pricing at all costs, as the worst case scenario of this is a price war, which generally cannot be escaped, resulting in one survivor, who goes on to become the monopolist.

Cole is an Australian supermarket with large influence and market share in the country. In addition, the company contributes significantly to the nation’s economy. In essence, the company has acquired more than 30% of the market share of the supermarket industry in this nation. Specifically, the company’sproduct line consists of daily products, grocery, meat, deli, fresh produce, bake house, cigarettes, liquor, apparel, general merchandize and over head products. Notably Cole has a culture of low price as its marketing strategy of attracting and retaining customers.

New South Wales, Victoria and Queensland are the regions contributing over 75% of the 18.9 billion industry revenue. Westfarmers (Target and Kmart) and Woolworths (BigW) are the two largest companies competing on low-cost strategies (Porter, 1980). Myers and David Jones, holding 15.3% and 10.5% market shares respectively (Figure 1), compete on differentiated strategies targeting the upper consumer market (Porter, 1980). Over 10% of the total working population are employed in this industry (Productivity Commission, 2011).

Both Walmart and Aldi should be worried about each other because both have distinct advantages over each other in bringing in customers. Aldi advantage is that its stores provide the lowest price in town with their products being on average 15-20% cheaper than Wal-Mart (pg 3). How it does this is by cutting costs and offering its products at the lowest possible price. This practice of cutting cost is best summed up by the Aldi motto “"When you buy a can of peas at Aldi, you're paying almost

At Coles, Australians ideal state would be that every item on their grocery list would be at Coles, and would be on a discount. In reality, the actual state or the way things really are, is that consumers will have to make another brand work when they can’t find exactly what they want, and that nothing is on sale. After consumers recognize that there is a problem, then they go into an external search or internal search. External search

7. Specials: Specials entice shoppers into store & encourage savings, so Aldi’s 5 star rating for specials is a big win. Coles & IGA received 4 star for their specials & Woolworths followed