Aldi Retailer International retailing

individual assignment
I. COMPANY PROFILE

1. Aldi summary

Aldi GmbH & Co. oHG (Aldi Group) is a discount food retailer operating supermarkets and discount stores.
The company operates from two independent business groups: Aldi Sud and Aldi Nord in Europe, United
States and Australia. Aldi Süd manages expansion in English speaking countries and Austria, which borders
its operations in Southern Germany. Aldi Nord manages expansion in the rest of Europe as well as Northern
Germany. The company’s product portfolio includes food, beverages, toilet roll, sanitary articles and other
inexpensive household items as well as expensive products including electronics, appliances or computers.
By 2010, Aldi had global presence through its 8,133 stores. (See Exhibits 1,2,3)

2. Vision and mission

“The value we offer our customers stems from the numerous efficiencies and innovations we’ve instituted
at every level of our operation. That is providing the highest quality products at the lowest prices” (See
Exhibit 4)

II. DEVELOPING AND MANAGING ALDI RETAIL INTERNATIONALISATION

STRATEGY

1. Aldi’s offer related innovation in building the “Hard-discounter” (See Exibit 5) image over the
world

a. Aldi own-branded products

- Aldi stores offer a limited number of good quality products at low prices: 700 products of the most
popular everyday grocery and household items (in constrast to a standard supermarket with 25,000 and
30,000 products)

- Aldi also offers a selection of ‘surprise buys’, which change every week and are only available as long
as the stocks last

- Almost the products of Aldi are their own brands in order to remain independent, enabling them to
avoid high marketing costs often associated with national brands and to set their own price, product and
quality policies. Aldi Australia stocks a few national brands such as Vegemite, Kellogg’s breakfast
cereals, Milo and Nescafé, however, 95% of the products are Aldi’s own brands. More than 80% of its

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 Aldi Retailer International retailing
individual assignment
products are Australian made and many of its home brand products are produced by well-known brand
manufacturers (See Exhibit 6)

- The limited number of products enables Aldi to leverage its impressive buying power and to control the
cost of its products by buying in large quantities

b. Excellent quality

- Providing fewer products means that the quality of the products can be controlled more rigorously

- Aldi’s products are tested and sampled on a regular basis, both in-house and in independent food
laboratories. The in-house tests involve blind tests by managers who compare their own products with
those of leading brands. Aldi’s website states that they would withdraw any product immediately if
there were the slightest cause for concerns

 Aldi committed to keep their products to meet or exceed the quality of national brand names

c. Superb special buys (the case of Aldi USA)

- Every Thursday Aldi introduces an exciting selection of ‘special buys’. These are always extremely
popular, and of course amazing value.

- Aldi USA does lots of in-and-out promoting of everything from major national brand groceries, which
they don't carry everyday, to gourmet foods on occasion like "Whole Lobster for the best price in the
U.S." and numerous ethnic foods items, usually tied-in with major events like Chinese New Years for
Asian foods and the like

- But even more interesting, Aldi tends to promote everything: food and grocery products, furniture,
computers, consumer electronics, flowers and plants, garden supplies, clothing and more, under the sun

d. Huge saving for customers

Thanks to the small-format, no frills discount grocery chain, Aldi’s grocery prices are set low and stay low
every day. And customers are the one who benefit paying less on their weekly shopping

e. Encourage customers buying with confidence

Aldi is confident in the quality of their products, that every store offers a “total satisfaction or your money
back” guarantee. All of these select brand products are backed by their 100% Satisfaction Guarantee. If
customers are not satisfied with the product, it’s replaced AND their money is refunded. (See Exhibit 7)

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 Aldi Retailer International retailing
individual assignment
2. Support related in facilitating the shopping by maintaining the simplicity and efficiency of
stores’ design and service
- Aldi stores are usually 1200 metres in size. The small size of the stores makes new sites cheaper and
easier to find, compared to other supermarkets with their jumbo-sized stores

- Aldi usually starts with locations in lower middle-class suburbs that have full employment. Once a store
is profitable and attracts many customers, it tends to open another store close by. Stores in Australia are
either stand-alone or located in shopping centres, as opposed to Aldi’s European stores, which are
mostly stand-alone

- Aldi stores typically have only four or five employees per shop, compared with about 15 at a standard
supermarket.

- No frills design and no aisle decoration. The design of Aldi stores is simple and practical and all stores
share similar layout and product presentations. The stores are usually bright, modern and have wide
aisles. The products are displayed in specially designed cartons that can be stocked directly on to
shelves or wheeled into place by using pallets. The placement of the pallets is based on logistic
considerations, namely to improve workflow and productivity. Using pallets makes it easy to restock
items, staff simply remove the old pallet and replace it with a new one. This approach helps to save on
labour costs to stock shelves (See Exhibit 8,9)

 Drawback:
The retailers opening hours and operational periods are different to those of their major rivals. The discount
retailer does not open on Sundays or Bank Holidays and this could be an opportunity to look into. During
these holidays people in certain industries are not likely to be working these days, therefore, they will with
be at home, or visiting friends and relatives and so may visit a supermarket (preferably their nearest one) to
either carry out their weekly shop or to go and purchase items such as presents and food or beverage gifts.
3. Organization related retailing – Aldi decentralized organization structure and operational
process

The first, and probably most important decision to decentralise was when Aldi was divided into Aldi North
and Aldi South (See Exhibit 10) that helped
- Creating two independent and autonomous organisations and enabling the brothers to pursue their own
strategic ideas, rather than trying to compromise
- Enabling the brothers to exchange experience, compare methods and results and to implement the most
successful approaches that the other Aldi had tested

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 Aldi Retailer International retailing
individual assignment
- Aldi’s organisation structure is flat and lean: no planning department and no central functions (MKT,
HR, controlling...). The responsibility lies with people in line functions who work on practical solutions
and who are responsible for their implementation as well as the results. Staff positions do not exist
Second, Aldi focuses on delegation. Tasks that are delegated are those that can be fulfilled in a better and
more cost-effective way by others; make the workplace more interesting for employees; include
responsibility; are challenging and contribute to employees’ professional development; relieve superiors
and allow them to concentrate on core tasks (See Exhibit 11, 12)
 There is less bureaucracy and conflict due to the small size
 Problems can be dealt with quicker and knowledge about the local market can be used to improve
Aldi’s approach
 employees are more involved in the development of the organisation and they have greater potential
for career advancement

III. CHALLENGES AND SUGGESTION

- The main challenge for Aldi can be considered as crucial rivalry from the market especially Lidl –
Aldi’s major competitor in these “hard discounters” business concept. Competition will always be a
threat of any business since competitors can copy Aldi’s approach in many aspects (Lidl has competed
with Aldi in the domestic market for years and currently expanding to the international market as the
way Aldi did)

- In order to deal with this situation, through vertical integration they can eliminate additional costs
associated with dealing with external suppliers and producers and also erect barriers to entry for
competitors, strengthen the relationship and association with other manufacturers to make sure of
following their own branded products strategy. But the most important for Aldi is gaining more loyalty
and satisfaction of customers by keeping product’s quality to meet or exceed the quality of current other
brand; by maintaining the low price of products and the simplicity but efficiency of stores as well as
providing the convenience for customer to enjoy shopping everyday from distribution system and value
added services. (See Exhibit 13)

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