Aldi: A Strategic Analysis of the Discount Retail Giant Case Study

1. Introduction to Aldi and the entire Retail industry

a. A brief description of Aldi

1. Mission, Vision: The company Aldi launched in 1990 in Great Britain and for 40 years, the company maintained great quality with low prices items with a global presence. This company's main vision is all people have the scope to buy groceries every day from anywhere of the highest quality products at the lowest price. This company always maintains its good quality of products.
2. Current Objectives, strategies [Cost/differentiation, focus, the theory of the Firm]: The main goal of Aldi is to ensure the product is of the highest quality at promised low prices. To provide the customers buy the products regularly the main strategies are price, promotion, product, and place which are used in business and create effective plans.
   Always good products provide good, genuine customers which creates demand in the marketplace. Next is price, if any product's price is too high then few customers purchase the product but if the price of any product is too low then many customers are concerned about the product's quality. Always should choose the right place for the market because the target customers' reaching factor is the main thing and also digital places are very effective for the market and target customers. Product promotion is a significant factor in the business because there have various different ways to promote the product. Some traditional ways such as television commercials, and print advertisements are used for promotion, In the digital way email marketing and content marketing also use in the promotion of the product.
3. Customer Analysis, target markets: Aldi's customers are mainly mid-level men and women groups and shoppers worldwide. In social media, 36% of groceries customers in the UK heard about this company. Aldi helps learn from other companies through its marketing strategy and analyzing the e-commerce page. Aldi reduces the cost and removes waste which means the lean principle. This company trades from Monday to Saturday from 8 am to 8 pm. whereas other competitors open 24 hours which means Aldi's sale period is shorter for spread over. But in this short period of time, Aldi is very productive in manner. The Ansoff matrix is a tool of strategy to guide business for business growth and this company is successful to use the Ansoff Matrix and chain of value.

b. Industry, mission, vision, and current strategies used

1. Trends (growth%, profitability, market share, and future trends: According to Spanjaard and Freeman, 2022, Aldi is a discount supermarket that sales in December by 26% compared to the last year which is reflected in new stores for savings in the crisis situation. This company has 990 stores and a 9.3% market share in the last year to become the largest supermarket chain in Britain, 28% of fresh poultry and pork and fresh meat highlighted the strong growth (Hardaker and Zhang, 2021). While the snacks items such as crisps and nuts were up 40% then the fresh cheeses and chilled desserts have 30% and 50% respectively.

A brief description of the retail industry

a. Critical Success Factors

The critical success factors are people, strategic focus, operations, finance, and marketing.

• People: Employees choose based on people's talent, strengths, and attitude and give them development opportunities and reward for high score.
• Operations: Volpe et al.. 2022 opined that all employees must take all the responsibilities for business growth and create value.
• Marketing: Marketing means customer relations, sales, and other responsibilities and the company depends on customer feedback, satisfaction, needs, and value.
• Strategic focus: This means the role of planning, leadership, and management.
• Finance: Through the financial processes a business control guarantees profits and cash flow and the financial factors include equipment, assets, and facilities.

b. Factor Analysis

On the basis of Business Tactics, ALDI PESTLE Analysis investigates the different factors such as economic, technological, and social-political which impact along with environmental and legal factors (Sikos and Kovács, 2022). PESTLE analysis plays a vital role in companies like ALDI. PESTLE helps to realize the dynamics of the market and progress the business tremendously.

Rahma et al. 2020 stated that environmental analysis is a factor in PESTLE analysis. In sustainable development, ALDI purchases stock from local producers. It has a plan that label packaging is recyclable, compostable, and reusable by 2025. It would be more environment-friendly for customers saving the environment. Due to the packaging of home delivery, they are working on reducing the created waste. From the pestle analysis, In the political factor,

• Latuconsina et al. 2022 stated that UK’s political stability gets “0.54 points”
• Corruption rate of the United Kingdom 78

Economical factor

• According to Aschemann‐Witzel et al.. 2022, the GDP of the United Kingdom was 3.13 lakh crores in the year 2022
• Inflation rate of the country is 7.2% in 2022 social factor
• According to Fredrich et al.. 2022 £12,247 is the average rate of annual income

Technological factor

The government invests $27.9bn in the year 2022 in technology.

Legal factor

The Occupational Safety and Health Act of 1970 and the Companies Act of 2006 are applied to the organization.

Environmental factor

• The Environment (Protection) Act, of 1986, and the National Green Tribunal Act, of 2010 applied to the organization.

3. Porter Five Forces Analysis

a. Analysis using Porter’s Five Forces model

Lauer, 2019 opined that Aldi is one of the supermarket chain global companies. Bravi et al.. 2022 stated that the business model provides the opportunity for the customer's experience of shopping by maintaining the cost leadership strategy to save money. On the basis of cost, the competitors compete to competition, and the main competitors for the company such as ASDA, Tesco, Morrison's, and Sainsbury. According to the statistics of 2015, Aldi has placed in sixth position (Čirjevskis, 2022).

1. The threat of New Entry: There have many well-established industries entering the market and new entrants have many barriers to entry including the entry cost required to establish the supermarket, gaining the right target market, access to distribution channels, and bringing in the point differentiation.
2. Threat of Substitution: There have many small stores and these consider for big supermarket chains such as Aldi. This company has substituted various products which customers can switch easily (Weinstein et al.. 2022). Customers also can switch products because, in the supermarket industry, there have substitutes for various products. Aldi faced a moderate threat of substitutes.
3. Supplier Power: In the Industry, big market leaders have an advantage because these leaders create powerless suppliers. Actually big marketers never want to lose and try to keep good relations with brands like ALDI.
4. Buying Power: Customers when coming to the supermarket then they have different requirements and mainly when supermarkets give some offer on products then they prefer the product quality over price. Utomo et al.. 2022 stated that the fact is that the cost of buyers switching is very low and the supermarket stores are located in multiple locations.
5. Competitive Rivalry: Aldi focuses to keep cost low which is an advantage for this company to gain market share to compete with other competitors in the industry.

4. Summarizing the Marketing Environment of Aldi

The strengths:

• The innovative strategy adopted by the company
• Kruse and Schultz, 2022 stated that the company has a large online presence across various social media platforms.
• High customer satisfaction because of its high-quality products

This company is very much confident with the product quality and it offers a double guarantee of products for customers. (Vinchristo, 2022).

The weakness is:

• According to Du, 2023, an increase in competition is forcing the company to reduce the margin.
• The pandemic hugely affected the supply chain resulting in shortages.
• The huge financial loss that the company is facing for the last 2 years.

The opportunities are:

• The company has the opportunity to use the self-checkout automated technology.
• As stated by Sikos et al. 2022, Opportunity for expansion in the rural areas as the demand for branded products is increasing in these areas.
• Possible for global expansion especially in developing countries as the customer base is very large in these countries.

The threats are:

• According to Schipfer, 2022, the pandemic has reduced the purchasing capacity of the consumer.
• Laws and regulations by various countries on entry of multinational brands and threats to the local market.
• Presence of competitors doing business in the same niche creates tough competition.

Conclusion

Aldi has control to grow the business worldwide and increase the customer base and market share. This company has to be able to create a unique strategy that is vastly increase. This company has a good quality of products reputation with the lowest price. Aldi faced many various uncertainties but still, it keeps to able a good report with the UK government. The Ansoff matrix is a tool of strategy to guide business for business growth and this company is successful to use the Ansoff Matrix and chain of value. With the current socioeconomic changes, the company keeps tabs by managing its services with the present trends.

References

Aschemann‐Witzel, J., Randers, L. and Pedersen, S., 2022. Retail or consumer responsibility?—Reflections on food waste and food prices among deal‐prone consumers and market actors. Business Strategy and the Environment.

Bravi, L., Gori, R. and Musso, F., 2022. Corporate Social Responsibility: A Longitudinal Analysis in the Retail Sector. In Managing Sustainability: Perspectives From Retailing and Services (pp. 9-31). Cham: Springer International Publishing.

Čirjevskis, A., 2022. Valuing Collaborative Synergies with Real Options Application: From Dynamic Political Capabilities Perspective. Journal of Risk and Financial Management, 15(7), p.281.

Fredrich, V., Bouncken, R.B. and Tiberius, V., 2022. Dyadic business model convergence or divergence in alliances?–A configurational approach. Journal of Business Research, 153, pp.300-308.

Kruse, B. and Schultz, C.D., 2022. Organizational Exit Strategies on Social Media Platforms. The SAGE Handbook of Social Media Marketing, p.388.

Latuconsina, Z., Soukotta, A., Kaisupy, S., Cakranegara, P.A. and Santoso, M.H., 2022. The Role of Supply Chain Management Practices in Mediating the Effect of Knowledge Management on Company Performance: A Study on Laptop Shops in Ambon City. Quantitative Economics and Management Studies, 3(3), pp.440-449.

Schipfer, F., Yilan, G., Govoni, F. and Morone, P., 2022. Strategies for Brand Owners and Retailers in the Circular Bioeconomy Transition. In The Role of Business in Global Sustainability Transformations (pp. 79-95). Routledge.

Sikos T, T., Molnár, D. and Kovács, A., 2022. The Impact of COVID-19 Pandemic on the Retail Sector–Policy-Strategy-Innovation. ÉSZAK-MAGYARORSZÁGI STRATÉGIAI FÜZETEK. GAZDASÁG-RÉGIÓ-TÁRSADALOM: TÉRGAZDASÁGTANI ÉS ÜZLETI KUTATÁSOK LEKTORÁLT TUDOMÁNYOS FOLYÓIRATA, 19(4), pp.76-85.

Utomo, S.K., Purnomo, R.A. and Cahyono, Y., 2022. Faktor-Faktor Yang Mempengaruhi Pendapatan Pedagang Kopi Angkringan Jalan Suromenggolo Ponorogo. Yudishtira Journal: Indonesian Journal of Finance and Strategy Inside, 2(3), pp.349-362.

Volpe, R. and Boland, M.A., 2022. The Economic Impacts of Walmart Supercenters. Annual Review of Resource Economics, 14, pp.43-62.