Retail Mix of ALDI

This report discusses the retail mix of ALDI, including its assortment, pricing strategies, and retail communication. It also explores the competitive advantage of ALDI and the challenges faced by the retailer. ALDI is a leading company in Germany that aims to provide the best services to its customers. It has a wide range of products and operates in multiple countries. The report highlights the strategies used by ALDI to achieve maximum customer satisfaction and competitive advantage in the market.

ALDI

Table of Contents
Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
Retail mix of ALDI......................................................................................................................1
Discuss competitive advantage on the basis of retail mix...........................................................4
Discuss several challenges faced by retailer................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This report is based on ALDI which is one of the renowned in Germany that deal with wide
range of goods or services such as grocery, household essentials and many more and aims to
deliver best services to their customers. This is regarded as one of the largest companies as it has
11000 stores in across 11 countries as it emphasises on maximum customer satisfaction (Penn
and Dale, 2017). This report comprises of retail mix which includes several factors such as
assortment. Retail communication, pricing strategies and also it covers several challenges to
achieve competitive advantage within the market.
Retail mix of ALDI
Retailing mix is one of the essential strategic plans that consider various factors such as
product, price, location and so on and use various methods to achieve maximum customer
satisfaction (Brandes and Brandes, 2019). In addition to this, it involves several promotional
strategies in order to persuade their clients and thus make a prospective market plan to achieve
individual and organisational objectives. One of the major benefits is that ALDI consist of super
market chain that deal with number of household items and is considered as the fifth largest
supermarket in UK. The concerned firm has 830 stores operating in UK as the aim of firm is to
decrease the food waste in order to achieve sustainability in a long term and it also take of
packaging by adopting the strategies such as reduce, reuse and recycle so as to provide protection
towards an environment. Also, the concerned firm is considered as the lowest priced market in
UK to achieve competitive advantage by emphasises on quality specification by gaining large
access of customers. There are large number of competitors such as Tesco, ASDA and many
more but the concerned firm provide cost effective and excellent quality and also offer after sale
service to their clients. The firm promote the facility of online shopping so as to add value
proposition among buyers. UK is a diverse country and population in this country are highly
standardised that give more emphasis on quality rather than price.
ALDI provide products with lot of varieties and offer product differentiation and also
emphasise on introduction of new trends that give vast opportunities, thus help in future growth
within the confines of retailing industry. It also beat its competitors such as Walmart by
rendering excellent service and provide an easy online payment to their clients.
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Pricing strategy: It is a method of marketing strategy that provide the value of goods or
services through various segments such as competitors, advertising cost, input cost and so on
(González-Benito and at.al., 2018). Additionally, the main motive is to maximize sales in order
to accelerates the market share by entering into a new market or by defeating its competitors in
an well established market. the various pricing strategies are described as follows:
Pricing strategy Description
Skimming This strategy focuses on selling at a premium
price in order to maximise profit by entering
into a new market when competitors are fewer.
Competitive pricing In this, product is priced according to its
competitors in the market.
Penetration pricing This strategy emphasises on selling goods or
services at a low price to capture large market
share and it also raise maximum clients from
different countries.
Premium pricing strategy This company focus on promoting a new
product in the market that is distinct as
compared to its competitors and sell at higher
price.
ALDI use the penetration strategy as it offers products at a low price as compared to its
competitors so as to gain maximum market share and also established positive brand image in
different parts of the country (Willems, Leroi-Werelds and Swinnen, 2016). In relation to this, it
allows discounts and allowance to attract large number of individuals and thus increase the sale
and productivity in a retailing industry. One of the most important tactics that is used by the firm
is that it establishes the price that seems to be lower by using the psychological pricing strategy.
ALDI emphasise to sold its product through several marketing channels such as
producers, wholesalers and retailers and also provide the facility of online shopping to provide a
great ease of convenience to their customers as it has approximately 500 retailers in UK and
render fast delivery of merchandise. Also, the respective firm emphasises on selling its product
through personal selling and has developed various social media pages to attract clients from
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different parts of the country. ALDI use several tactics of promotional strategies such as you
tube, Facebook and Twitter and also use various sales promotions such as exhibitions and events
which is considered as a cheaper means to attract their clients.
The management of ALDI provide training and development to their staff so as to
increase the knowledge base and also improve the communication skills which help in avoiding
confusion and misunderstanding and thus improve the overall performance. It provides
incentives on the basis of sales by meeting their targets and also the manager of ALDI recruit
people who are problem solving nature and show a great sense of respect to their customers.
Feedback is regarded as very important as it help in generating information about the
reaction or attitude towards the product or services. The main focus of ALDI is on quality as it
sell grocery and bakery items which is in demand through out the year and contribute to more
sale so as to increase the profit margin.
Store layout and Visual merchandising: This practice in retailing industry is understood as the
means of presenting merchandise in such a way that it creates larger visibility through window
displays, mannequins and so on (Laffy and Walters, 2016). As the focus is to draw the maximum
attention so as to promote the sale and it is considered as a strong marketing tool in an
organisation. The stores of ALDI have special lighting design such as ambient lighting in order
to make them feel luxurious and create a soft environment. Also, background music, scent of
aroma is used in ALDI that refreshes the minds of customers and makes them exciting towards
their shopping. One of the important fact is that the firm emphasises on displaying seasonable
products in a cantered location as it grab the attention of large number of individuals and
persuade them to buy it. Colour coding is highly taken into consideration because it enhances the
quality of items and also products are categorized on the basis of their nature, size, shape and
many more so that they are grouped together in a particular category.
ALDI has grown largely in the pat decades in UK and continue to expand their operations
in different parts of the world so as to generate more sales and thus increase the brand image
across the globe (Birkin, Clarke and Clarke, 2017). The respective firm is operating in many
parts such as Switzerland, Australia, Russia, China and many more so as to generate large
number of individuals. The store of ALDI emphasises greatly on simplicity and consistently as
they are of 10,000 square feet and top quality construction that promote a good environment
among the workers. In addition to this, it focuses on environment friendly products such as paper
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bags, art lighting that reduce the energy and help in achieving sustainability in a long term. The
goal of ALDI is to add 80 stores every year especially in a established market that provide
enormous opportunities and develop goodwill around the world. According to the annual report
of the company, the management emphasises on providing products at low cost at best quality
and deliver best services to their clients.
Retail Communication: This is regarded as the method to exchange information regarding
product or services among the customers through various methods such as websites, social media
pages, words of mouth, personal selling and so on (Act, 2019).The management of ALDI
provide information about their schemes through pamphlets and newspaper in order to generate
more sales and thus increase the profitability within the retailing industry.
Assortment: This is considered as the most important planning in a retail sector that help in
driving the sales as well as promote an enormous growth opportunity. The respective firm has
large number of stores in UK that provide wide varieties of products and their greater emphasis
is on standardised products so as to generate giant customers and thus increase their satisfaction
level. They provide several facilities like after sale service, home delivery and many more in
order to achieve a competitive position across the globe.
Discuss competitive advantage on the basis of retail mix
ALDI is leading company in UK that provide wide range of goods or services such as
groceries and household items, garden products and many more with finest quality so as to
achieve maximum customer satisfaction. There are large number of competitors such as
Walmart, Tesco, Lidl, Penny Market etc. The Porter’s five force is a framework that determine
the competitiveness of retailing industry so as to gain reputation across the globe. In other words,
it also determines the level of profitability and attractiveness to achieve a significant position in
different parts of the country. The manager of firm has applied this model so as to gain
competitive position across the globe which in turn increase more sales and profitability within
the confine sector of retailing industry. In the context of ALDI, the five models are presented as
follows:
Bargaining power of customer: The magnitude of this factor is usually low because there are
several competitors present in the market that provide similar products as a result there are
enormous opportunities which are available to buyers in retailing industry (You and Barry,
2016). But the concerned firm focus on providing excellent quality of goods or services at a low
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price which help in generating the sale of products. At the same time, the switching cost is less
so the customer can move to the other brand very easily that possess a threat to the company.
Threat of new entrants: the extent of this force is regarded as low due to huge capital
requirements that provide vast opportunities to the firm. ALDI provide wide varieties of products
at a cheaper price that meet the expectations of customers. The senior manager analyses several
market trends and focus on target market therefore, increase the sales and profitability in a
retailing industry.
Bargaining power of supplier: This model of Porter’s is acknowledged to be low due to the
reason that there are giant number of vendors present in the market that provide products at a low
cost and the management of ALDI has power to switch to another suppliers (Lasso and Dahles,
2017). The firm is considered as the buyer for Supplier and has meagre competitive pressure.
This enhance the company to purchase in bulk quantity at a low cost which in turn increase the
profit margin to ALDI within the confines of retailing industry.
Threat of substitutes: The Threat of substitute is acknowledged to be vey high because of
the reason that there are large number of alternatives that provides similar products in order to
attract customers from different parts of the country. Customer are more price conscious so
ALDI would provide excellent quality of products or services at a low cost but at the same time
the profit margin of the company declines. Therefore, this substituted merchandise possesses the
big threat to the firm.
Rivalries: The power of this element is regarded to be weak. There are several
competitors of ALDI such as Tesco, Lidl, Sainsbury, ASDA and many more. which determine
the level of product differentiation within the confines of retailing industry. So, they provide
similar products of a reasonable quality that give an efficient power to their customers to switch
towards other brands. Also, this declines the profitability and productivity of ALDI in retailing
industry and reduce the overall performance.
The ultimate reason that ALDI is beating its competitors especially Walmart is that it
keeps its prices low and providing quality specifications so as to generate maximum satisfaction
of large number of individuals from different parts of the country (Khashabi and et.al., 2018
Novikov, 2019). Also, excellent packaging of materials and fast delivery of products ensures
maximum customer satisfaction ant the manager of ALDI display their merchandise in their
carboard boxes so that employees could not waste much time in arranging them in shelves. In
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addition to this, the manager of ALDI recruit very few people so that it could save labour cost
and this cost is directly passed on the consumers. Therefore, the respective firm provide products
at less than 50% as compared to traditional markets so as to increase the sales at all stores.
Discuss several challenges faced by retailer
ALDI is popular brand in UK that has around 2500 stores which is ahead in competition
market as it deals with varieties of offerings at a low price and of standard quality. This help to
gain significant position in market and thus increase the productivity and efficiency. Also,
through proper planning and coordination help in achieving an organisational goal as well as
improve the overall performance in a retailing industry. The PEST analysis provide framework
which help the marketers to scan the internal and external factors so as to achieve competitive
position across the globe. With reference to ALDI, the PEST analysis is given beneath:
Political Factor: This element comprises of corruption, taxation policy, trade restriction which
affect the business cycle of any organisation (Mustofa and Alam, 2019). The impact of Brexit
upon the respective firm has been affected badly which results in rise in prices of products or
services. UK is regarded as the political stable country across the globe so it enables the business
operation of ALDI to perform effectively by forming an appropriate plan and strategy of action.
Economic Factor: This constituent several factors such as economic growth, interest
rates, GDP and many more that affect the overall economic performance of the country.
However, Foreign Direct Investment provides a great opportunity of investment and thus
enhance the growth. The vote for Brexit has created an unimaginable chaos and adversely
affected the economy as the VAT rises from 17.5% to 20%. With reference to ALDI, this leads
to an increase in prices of goods or services and decline the overall growth of the company.
Social Factor: This comprises of all those factors which provide an interlinking of
business towards the society such as taste and preference of customers, emerging lifestyles, diet
consciousness, safety emphasises and so on. The population in UK are considered as diverse and
more conscious of their health as well as have better standard of living. It is necessary for the
management of ALDI to keep in mind the change in trends through market research so as to
achieve more customers from different arts of the world. Additionally, this provide growth
opportunity as the respective firm provide quality products and thus achieve competitive
advantage within the confines of retailing industry.
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Technological Factor: In a digital era, technological advancement is given as the utmost
priority which includes innovation, research and development. UK is considered as the advanced
technology hub in the world (Newsom, 2019). The management of ALDI has promoted various
facilities such as online shopping, online payment and use various social media platforms like
Twitter, Facebook so as to promote its information regarding the products and also this provides
a great ease of convenience among the customers. Furthermore, online platform is considered as
the best promotional strategy to promote the product among the group of individuals thus
accelerates the sale of goods or services.
The total market share of ALDI in UK is 18% as it has opened currently 1500 stores by
targeting to open one store every week so as to capture large market and thus generate the brand
image (Steenkamp and Sloot, 2018). Its topmost competitors are Morrison, Tesco and Iceland
that provide similar goods but ALDI provides excellent offerings at low cost to generate large
number of individuals. The culture of UK is diverse which emphasise on quality and provide
convenience to their clients through promoting online shopping and easy access of online
payments. Due to the reason of globalisation, there is vast opportunities of growth for ALDI as it
offers several products such as fruits, vegetables, wines and other essential items which has
expanded its operations in several parts such as France, Denmark, Spain etc. Furthermore, there
are several competitors of ALDI in UK which provides several products of similar attributes but
it provides at a less cost. The concerned firm has stated its operation in UK in 1990 and has
expanded in more and more regions through Foreign Direct Investments which provide an
enormous growth of the company and thus enjoys economies of scale within the retailing
industry.
Through advertisements and rapid distribution network, the respective firm has recorded
greater sales and always focus on expansion by maintaining an effective marketing strategy. The
senior manager of firm prepares a proper planning and divided the work among their staff that
matches their talent and thus gain a competitive position in a retailing industry.
ALDI has applied the penetration strategy to capture the large market share by selling its
products at a low cost. In relation to this, it is not just limited to selling of products like fruits and
vegetables but also expanded in product development strategy by introducing mobile phones and
so on. It also emphasis on adaptability and innovation which enhance the strong brand image in
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the market and also provide protection towards the environment by use of paper bags and reusing
strategy.
CONCLUSION
From the above furnished information, it can be summarised that retailing industry play an
important role in an organisation as it deals with buying and selling of goods or services by
providing presentation of information to their clients and also emphasise on display of
merchandise so as to enhance the visibility. It has been analysed that there are several factors of
retail mix which are taken into consideration for making a retailing industry a profitable and
strong competitive sector such as visual merchandising, store layout and design and many more.
Also, it has been analysed that various pricing strategies and location is necessary especially
covering the target market.
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