Market Situation and Competitor Analysis of Aldi

This report discusses the market situation and competitor analysis of Aldi, covering its internal and external environment, product line overview, market segmentation, and more. It also provides insights into the strengths, weaknesses, opportunities, and threats of the company.

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Executive summary
The report highlights the market situation of Aldi. It covers all the dimensions of the internal
and external environment of the Aldi. The report has a brief description of market
segmentation such as demographics and geographical basis. The company is a renowned
supermarket and retail company. In the increasing market, consumers have a greater choice
of wide ranging products or services. The company is able to make unique market strategy
with an clear objective of objectives with effective promotional activities.

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Contents
Introduction...........................................................................................................................................3
Internal analysis.....................................................................................................................................3
SWOT analysis..................................................................................................................................3
Product line overview........................................................................................................................4
Controllable elements........................................................................................................................4
External analysis....................................................................................................................................6
Macro environmental analysis...........................................................................................................6
Market situation.....................................................................................................................................8
Competitor analysis...............................................................................................................................8
Market segmentation...........................................................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................12

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Introduction
The report brings out the discussion on internal and external situation of the market. The
retail company named as Aldi faces business challenges to stand apart and strongly into the
market. The report discusses the strengths, weaknesses, opportunities, and the threats of the
company. To have a sustainable growth in the business, a company has to look after the
market situations, its macro environments such as political, social, technological, legal,
economic, and environment and the find out the potential customers (Bhasin, 2018).
Internal analysis
SWOT analysis
Strengths- The pricing system of Aldi is based on discount store chains because low prices
encourage the customers to buy. Many customers do their daily shopping from Aldi because
the prices of these stores are lower than the other mainstream retailers. Moreover, the
company enables discount store chains, which build a strong ecosystem that has altered most
critical parameters of the food retailing. There is a high level of support from the customers
and the company provides with a high range of products with affordable prices (Bhasin,
2018).
Threats- The competition is detrimental and biggest threat to the existence of the business.
Aldi faces competition from many retail companies such as Walmart, and Best buy etc. In
addition to this, there have been retailers who have grown and emerged as online stores for
the grocery also. Moreover they also face threat from the competition from the emerging
online retail stores (Klindzic, Knezevic, & Maric, 2016).
Weaknesses- Discount stores depend on the low margins and are heavily dependent on the
sales volume. They also indulge in highly other unethical practises such as price
discrimination. Moreover, it does not treat its suppliers very well especially when their

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margins are consistent. In addition to it, the company is not able to satisfy its customers. The
company needs a high level of productivity so that it can survive in market. The workforce
should engage in multiple shifts that are paid with most suitable type.
Opportunities- The Company is ridden by the needs of the customers and propensity of the
customers has also increased. The customers are ready to pay the premium for the services.
The discount store can charge high by offering the better quality of goods and services. There
are number of new products especially in niche market that can offer new avenues for the
business.
Product line overview
The products which are mainly offered by Aldi to their customers include wide range of the
food, beverages, sanitary articles and the household goods. Along with this, the company is
expanding their product range by the organic, fresh and easy to prepare meals. This reflects
the strategy which is followed by the company that is to offer the diverse products to their
customers. This has been found that company majorly sell produced and custom-branded
products with the name of brands like Grandessa and Fit & Active (Chung, 2017).
Mission: - The mission of the company is to offer the goods to the poor and lower income
group people who could not afford the same. Along with this, they want to offer the
employment to maximum people.
Objectives: - The objective of the Aldi Company is to manage the quality of the products and
well-organized operations. They also work with the objective to maximize the profit of the
organisation.
Controllable elements

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The controllable elements are those inside factors that affect the working of the company.
Aldi also gets affected due to some factors which are discussed below: -
Expansion of business
Aldi Company reported that there is rise in the demand for the products due to which it is
planning to open 70 new stores in the market of UK. Currently, the company’s market share
stands as 6.2% which is expected to rise.
(Source: BBC News, 2018)
Low price
The low price strategy is effective strategy that is followed by the company and with this it is
able to become the leader in the market of Australia. This low price strategy helps the
company in grabbing the attention of the customers. Though, due to this strategy the
company is not able to achieve the profit which is major influence on the operations because
now they are willing to add more products in their product range through which they can earn
profit.
Facilities within stores

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The company is offering different facilities which include the shopper path-to-purchase
strategy; they tailor their employees while entering and help them at the point of checkout.
Though, the development of the technology is influencing the company’s facilities as there is
need of further strategies (WPP AUNZ, 2018).
External analysis
Macro environmental analysis
Political- Here exist a high level of political vulnerability across the world, which threatens
the sustainability of the foreign organisations. The majority of retail stores are situated in
Europe, Australia, China, and USA that are free from all the conflict arising from the Aldi`s
operations from the war. After the Britain planned to leave, the EU (European Union) was
based on Britain voting. The uncertainty always remained in the future of European firms in
the UK. When the company entered into the FDI with the UK, they are not affected much
because they generally enter the market through joint ventures or the other business models.
The relationship between the regulations and the political relations between the countries
named UK and the Germany specifies as most influencing countries in Eurozone that are
likely to become a barrier for the Aldi`s operations.
Environmental factors- Generally, Aldi is increasing its dependence on the British producers
and other farmers to support the local producers and ensure that it ensures the sustainability
of the local operators.
Economic- The impact of Brexit had a rise in UK. This economic change has affected the
shoppers to turn the Aldi`s favour to the discounters. The company has become one of the
fastest growing retail store that resulted in the price rise in the supermarket as since the after
the vote of Brexit. Moreover, the inflation rate in the grocery market rose to 2.9 percent in
May, which is an increase as compared the last month. It is found that shoppers have found

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that shoppers generally spend $27 more for the same goods in the same period. The overall
growth of the grocery market in May 2017 was approx. 3.8 percent. I t is expected that as the
market expands, the demand of the goods will also rise. Sales in grocery market has raised in
total just by 0.2 percent due to the consequences of the food price inflations.
Social
Currently, Aldi is the highest paying supermarket in the United Kingdom after delegating the
work among the 3000 staff members that pay a rise in the bid to overtake the fellow German
Discounter especially in terms of payment of wages. High wage rate system would result in a
good standard of living for those who are being paid. This allows workers to afford a better
quality of food, exercise, and other healthcare services, which in return gives a better and
efficient workforce. It is estimated that by 2020, Aldi aims to undertake some programs to
teach more than 1.2 million children in the UK. Apart from the education system, the
company wishes to provide teaching regarding the healthy eating habits by educating them
regarding the fresh food initiatives (Businessteacher, 2017).
Technology
Supermarkets have increased the use of technology to facilitate service propositions for the
customers. With the increasing use of online retail stores, the customer started using self-
service checkouts for the grocery providers. Aldi adopt technology to expand its business by
providing the products on the online platform (Wu et al., 2015).
Legal
The supermarkets have been frequently affected the business and industry scandals that is
concerned with the food products. Moreover, the most scandal renowned as horsemeat
scandal that affected the operations of Tesco. In 2016, Aldi found that legal disputes are
occurred due to misrepresenting sales of herbs and legal impositions on finding olive leaves

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in the oregano products. The UK market is highly restricted in operating for the entry of the
Multi-national difficulty. European commission made it necessary to display the nutritional
facts of the products in the retail industry. EU standards helped the consumers to have a
balanced diet because under the necessary requirements, every company shows nutritional
facts of the product on the label. Moreover, the government legislation and the policies have
direct impact on the execution of Aldi work (Klindzic, Knezevic, & Maric, 2016).
Market situation
Discounted chains of Aldi has boosted the market share to view a high record of nearly 7.3
percent and 5.3 percent. The fiercing grocery sector in the competition remained a
challenging factor especially for the Sainsbury`s and Asda. Tesco`s sales are raised around
2.4 percent and attracted the customers of around 262000. Growth in the retail sector has
helped the online sales to grow in a fast pace (Mylan, Geels, Gee, McMeekin, & Foster,
2015).
Competitor analysis
With the increase in the number of the business operators in the supermarket and retail
industry, numerous factors have to be considered while dealing with the industry competition.
The company faces a threat of new entrants, economies of scale, access to efficient supply
chain and distribution channels, expected retaliation, bargaining power of the suppliers, threat
of substitutes. The factors are-
Threat of new entrants- The UK supermarkets are primarily dominated by the competitors in
the retail sector such as Tesco, Asda, Safeway, and Sainsbury`s that has a market share of 70
percent. Over the last 10 years, the grocery market has transformed into a dominant
supermarket business. The retail food industry of UK make the use of economies of scale to
the maximum extension. Many companies maintain economies of scale during operating a

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supply chain that improves the market position of the company. Entry and exit cost always
remained a major factor to enter into the market. Many local retailers take the opportunity
and come over many competitors by effective cost system (Businessteacher, 2017).
The distribution system of company is well developed with the association of large number of
suppliers. Competition analysis also considers and undertakes how well the company
performs. The bargaining power of the customers plays an important role in choosing what
bases of choices the customers in regards to the availability of items make. It is found from
the customer review that the company does not provide a loyalty scheme so that it does not
need to provide additional incentive. This supermarket industry focuses to overcome intense
rivalry, which is based on cost. Many brands offer matching prices with their competitors.
The company undertakes price comparison activities in the whole industry (Klindzic,
Knezevic, & Maric, 2016). This piercing cost system tries to lead aggressive marketing
campaigns that can help the company to win a good market share in the market. The
PORTER model can best describe the comparison and the competitive analysis of the
company in the industry. Apart from the industry analysis, a company also need to maintain a
cost leadership strategy. Aldi uses effective cost effective leadership that offer its customers
with a good value without reducing the quality of products. Aldi reduces not only the cost but
also it improves in terms saving time, efforts, energy, and the space. Aldi saves the cost and
pass the advantage to its customers. Aldi adopted JIT (just in time) method to manage the
stock and become more competitive in regards to the stock. There are two main advantages of
using the JIT, One is Aldi do not need to maintain an expensive warehouse. Another one is
they do not need to monitor the warehouse stock by managing the strict staff. Moreover, the
working capital is improved and eliminates the issue. It is more like keeping the money in the
bank without the interest (Mylan, Geels, Gee, McMeekin, & Foster, 2015).

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Market segmentation
It is reported that there is no major supermarket retail chain system that can attract the
relative customers in relation to the size of the customers. On the basis of different
categorisation of market such as demographic segmentation. Aldi targets the sector and group
of people, which is concerned with the low pricing system and follows a strategy that could
offer the product at the lowest possible price. High rated companies identify the potential
customers for its products that can meet the needs of the certain customers. Companies such
as British shoe corporation, Next, Toys R Us, TSB, and Burtons have established that
implementation of market segmentation and sequential chain if targeting people can lead to
success (Mylan, Geels, Gee, McMeekin, & Foster, 2015).
The demographics and product benefit is based on segmenting the market on certain
characteristics such as sex, gender, age, personality, and different income groups. The
company can serve a huge range of products on the basis of demographics such as food
products for the children, oats for aged and youth who are diet conscious. Moreover, the
company can serve every income group especially the middle and the higher income level
group. The family life cycle is an way of combining the characteristics of demographics
variables. The segmentation is also based on the geographical situations of the environment
where the company operates (Sawalha, Karampour, & Rogstam, 2015).
Conclusion
The above discussion focuses on the Aldi operations based on the internal and external
environment. Effective leadership and use of JIT helps the company to operate effectively in
the market. To undertake an strategically analysis, a company has to operate and conduct a
SWOT analysis, Pestle analysis and the Porter`s five forces model. The market share of the
company enjoys a considerable value in the market.

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References
Bhasin, H. (2018). SWOT analysis of Aldi. Retrieved from:
https://www.marketing91.com/swot-analysis-of-aldi/
WPP AUNZ. (2018). Annual Report 2017. Retrieved from: https://www.wppaunz.com/wp-
content/uploads/2018/03/WPPAUNZ-2017-Annual-Report_Final.pdf
Chung, F. (2017). Aldi beefs up product range. Retrieved from:
https://www.news.com.au/finance/business/retail/aldi-beefs-up-product-range/news-story/
f17271da986b9935f1e8316cf4255df7
BBC News. (2018). Aldi reports record sales but profits drop. Retrieved from:
https://www.bbc.com/news/business-37470173
Businessteacher, (2017). Aldi PESTEL Analysis. Retrieved from:
https://businessteacher.org.uk/pestel/aldi.php
Klindzic, M., Knezevic, B., & Maric, I. (2016). Stakeholder analysis of social
supermarkets. Business Excellence, 10(1), 151.
Mylan, J., Geels, F. W., Gee, S., McMeekin, A., & Foster, C. (2015). Eco-innovation and
retailers in milk, beef and bread chains: enriching environmental supply chain
management with insights from innovation studies. Journal of Cleaner
Production, 107, 20-30.
Sawalha, S., Karampour, M., & Rogstam, J. (2015). Field measurements of supermarket
refrigeration systems. Part I: Analysis of CO2 trans-critical refrigeration
systems. Applied Thermal Engineering, 87, 633-647.
Wu, X., Chang, Z., Zhao, X., Li, W., Lu, Y., & Yuan, P. (2015). A multi-scale approach for
refrigerated display cabinet coupled with supermarket HVAC system-Part II: The

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performance of VORDC and energy consumption analysis. International Journal of
Heat and Mass Transfer, 87, 685-692.