Business Strategies of Aldi Supermarket in Australian Market

This report analyzes the business strategies adopted by Aldi Supermarket in the Australian market and its competitive advantages over Coles and Woolworths. It discusses exclusive branding, target focus, price change policies, digital business strategy, people management practices, marketing, and corporate social responsibility. Recommendations for other supermarkets are also provided.

Competitive Strategy

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Executive Summary
This report is written with intent to analyse the business strategies that adopted by the
Australian supermarkets for the success and growth of the company. The whole report is
based on the analysis of the case study in relation to Aldi Supermarket, which is largest
German based organization. This report presents the strategies that adopted by Aldi group to
establish its business in Australian markets and gaining competitive advantages over Coles
and Woolworths. The purpose of writing this report is to understand the role of the business
strategies in organizations to achieve its future growth. The report highlights all business
strategies of Aldi supermarket including digital strategy, marketing, Price change policies,
performance management practices and corporate social responsibility. On the basis of the
case study analysis and all these business strategies, the recommendations for other
supermarkets are also drawn at the end of the report.
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Contents
Executive Summary...................................................................................................................1
Contents......................................................................................................................................2
Introduction................................................................................................................................3
Business strategy........................................................................................................................4
Exclusive brand......................................................................................................................4
Focused on target....................................................................................................................5
Price change policy.................................................................................................................5
Digital business strategy.........................................................................................................6
People management practices.................................................................................................6
Marketing...............................................................................................................................7
Company Social Responsibility.............................................................................................8
Recommendation for Australian supermarket...........................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10
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Introduction
This report is based on the current position of the Australian supermarket and its future. This
report is presenting the business strategy analysis of the Australian supermarket that is
overruled by a German company known as Aldi. At the present level, the Australian market
is facing the complex structure in the supermarket sector where the top companies like Coles
and Woolworths are dealing and competing with the German company Aldi. Aldi is having a
very strong and effective business strategy for the Australian market and it is the reason that
this company has gained success in the Australian market in the last some years.
In the competitive environment of Australia which was captured by the two leading
companies, Aldi came into existence in the year. At that time no foreign company was able to
stand in the competitive environment of Australia. Up to the year 2004 this company was
able to capture the 4% of the supermarket share of Australian and had successfully opened 83
stores in NSW (News Corp, 2018). This Company was able to do 1.25-billion-dollar business
in Australia by the year 2006.
In this given report, on the basis of the case study, Australian supermarket: who will win and
when? This report will present the business strategy of Aldi in Australian and how it really
works for this company. At the end of the report, some essential recommendation and
suggestions will be presented for the other companies like Coles and Woolworths for the
business and its strategies for the long run profitability.
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Business strategy
As per the study, it is clear that the strategic management is not based on a particular tactics
or practice. For the profitability and success in the business, it is essential to seek various
arrangements through which the company could get the sustainability as well as profit. As per
the resource-based theory of the strategic management, it could be observed that for the
perfect operations and for the enhancement of competitive advantages, companies require
bundling of capability so that the organization could gain the upper hand in the competitive
environment of the same type. It could be observed in the case of Aldi also, as this company
enters into the market of Australia with multiple capabilities than Woolworths and Coles.
This helps Aldi to gain the upper hand in the Australian supermarket sector.
Exclusive brand
In the Australian market, the business strategy of Aldi was totally based on the key
components i.e. brand, limited range, fixed target and price variation tactics. As given in the
case study that the low price strategy of Aldi is very challenging for the other companies of
the same sector like Woolworth, Coles, and Metcash system because of big companies are
incapable to reach and match the price that Aldi is offering in the Australian market (Sandeep,
2012). In the year 1980, Coles and Woolworths also take the same initiative for the price
down strategy. Like Woolworth conducted the campaign of “cheap cheap” in which they also
assign the ambassadorship to Jamie Oliver. It was the part of the business strategy by this
organization which was later copied by Coles for the same.
Aldi is focused on the exclusive brand picture and in that concern, this company has
established good relationships with the local suppliers who make items for this company.
Aldi sell these goods by its company naming as an exclusive brand by Aldi. As per the
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market share observation, it could be concluded that people like to buy Aldi brand goods
when their purchase choice is fixed for low price high-quality need.
Focused on target
As per the case study, it could be analysed that Aldi is focused on the target and so this
company comes with a limited range and are strictly focused towards their present stage.
Moreover, this company never follows the tactics of Coles or Woolworths for expanding their
operations in various sectors. As compared to Aldi, Woolworths and Coles are in the business
sector of online shopping, pharmaceutical, liquor, and petrol (Dunford & Palmer, 2017).
Additionally, this company never changes their tactics as per the need of the customer rather
they analyse the market trend and produce the goods likewise in shape, size and variations.
By stocking minimum goods of limited edition, this company enhances profits by reducing
the costing. As given in the case study that in Aldi store there the customer could find only
one variety of potatoes but if the same customer visit Coles he could fine five to six varieties
there (Morgan, 2017).
Price change policy
It is observed in the case study that Aldi has a strong business strategy through which this
company is very flexible for a price change of its goods. This company is the only company
in the supermarket sector of Australian who is very flexible for price change. Moreover, they
provide the good to the customers at a very attractive price as compared with other rival big
companies (Abubakar, et al., 2011). They communicate the price change to their potential
customers by placing a written note in their store so that every customer came to know.
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Moreover, this company is also having its app and through the App, they send notifications to
their customer about the weekly offer that they provide to their customers.
Digital business strategy
The case study has given the vision that Aldi is having its own mobile app through which the
potential customer could search and make a wish list for their purchase. Through this app,
this company communicates the various notifications to its customers. Aldi viral the deal of
the day on their app so that every customer gets attracted towards the deal and make their
purchase decision for the goods at Aldi (Pulker, et al., 2018). A gradually the same digital
strategy will be adopted by the other big rival companies also. The case study has depicted
that Coles is planning to grab more and more customers through the online platform. They
are working on the flybuys system so that their potential customers could shop more and gain
points for their deals. Additionally, Coles is planning for email marketing also (Bankwest,
2018). Through email communication, this company will enhance the bonding between their
customers by presenting the right deal and offers at the right instant of time.
People management practices
On the analysis of people management, it is observed that Aldi believes in the decentralized
structure as compared to a single big store. As per the study, it is observed that the Aldi store
has ten to fifteen representatives that work into the store and about six counters are for the
billing purpose (Australian Government, 2015). Aldi tries to open more outlets in the area as
compared to maximize the capacity of single storage. It gives the company an upper hand to
capture vast areas. Moreover, it is the best technique for monitoring and management. On the
other hand, it is observed that other companies in the supermarket sectors are also improving
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their people management system. In case of Woolworths, it is given in the case study that this
company has added more working hours for the representatives so that they could work more
to organize the goods on the shelf as well as could assist the customers into the store. This
company has appointed their staff at the billing point for the packaging of the goods so that
better packaging could be given to the customers for their ease and satisfaction (Neo, 2019).
Marketing
The main focus of Aldi is always towards the core business and this company always try to
minimize the cost by minimizing the functions. This company does not have any particular
legal department, resource management department, and marketing. The company use and
relay on the mouth to mouth publicity of marketing technique (Minifie, 2017). Moreover, this
company only perform local advertisement only. They utilize their time and energy on the
quality of the goods as well as on the pricing tactics for their goods. Moreover, their business
tactics are not to oblige investor market as this is a small private company. On the other side,
a company like Woolworths believe in expensive marketing in that respect they rely on the
brand ambassador and different modes of advertising and marketing in all the regions of the
country. Coles, as well as Woolworths both, do a deep analysis of the demography for
opening a store (Regional Australia Institute, 2015). They spent a huge part of revenue on the
planning and construction of the building. In the case of Woolworths, this strategy was
observed in the case study by viewing the case of Mallams supermarket.
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Company Social Responsibility
Aldi also seeks for the company social responsibility and in concern of that, they are
committed to the environment as well as government that they will reduce the use of carbon
footprints. Additionally, this company is working on the recycling concept so that the
pollution, as well as waste by the company, could be reduced and reused to avoid any legal
obligation. Moreover, this company has successfully introduced ethical guidelines regarding
child labor in their code of conduct. They take care that they do not over wheel the rules and
regulation. This is a strong business tactic in this supermarket. They work for the society and
for the benefit of every individual. The low pricing policy is the key element of this concern
(Dunford & Palmer, 2017).
Recommendation for Australian supermarket
It is recommended for the Australian supermarket sector that the companies must target their
business strategies so that they could frame strong tactics that could help them to deal with
the different political issues throughout the country. For that concern, companies must
reframe their pricing policy so that they could attract more and more customers. Pricing
policies must be revised by the company by keeping a mind on all level of financial strata and
their buying preferences. In that concern, companies must introduce goods in all range and
size. Moreover, in the case of organic goods, it should be fresh and approachable. Companies
must take care of the packaging system so that the goods could be safely carried as well as
delivered without any damage of issue. It is crucial for every supermarket company that they
must take care of the training and skill development of their representatives (Kurnia, 2013). It
helps these companies to grab more satisfied customers. Offline and online feedback system
must be channelized so that the companies could get the real-time feedback. On the basis of
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the feedback, they must improve and upgrade the arrangement of the store. At last, most
importantly, all the supermarket companies must improve and fasten their billing process. It
should be less complex and time-consuming. Special checkout system must be implemented
at the cash counters for the old and physically challenged people to reduce the struggle for the
billing process.
Supermarkets must take care of 3R’s for the long run sustainability. Reduction, recycling,
and reuse are the three essential parameters for the sustainability of Australian supermarket
because it will minimize the political as well as legal obligation from the company.
Conclusion
From above analysis of the case study, it is concluded that all the business strategies adopted
by Aldi Company resulted into the success of the company in Australian market. It is also
analysed in this research that Aldi faced strong competition from Coles and Woolworths.
However, business strategies used by the organizations are effective in nature as they help the
company to compete and survive in this competitive environment. At the end, some of the
useful recommendations are given such as the use of technology, innovation, target oriented
approaches for the better future growth and success of companies.
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References
Abubakar, B., Mavondo, F. & Clulow, V (2011) Customer satisfaction with supermarket
retail shopping, Available at:
https://www.researchgate.net/publication/254900375_CUSTOMER_SATISFACTION_WIT
H_SUPERMARKET_RETAIL_SHOPPING
Australian Government (2015) Price Determination in the Australian Food Industry,
Available at:http://www.agriculture.gov.au/SiteCollectionDocuments/ag-food/publications/
price-determin/section5.pdf
Bankwest (2018) Bankwest Future of Business: Focus on Supermarkets, Available
at:https://www.bankwest.com.au/content/dam/bankwest/documents/business/insights/focus-
on-supermarkets-2018.pdf
Dunford, R. & Palmer, I. (2017) Strategy for Successful Entry into Aconcentrated and Highly
Competitive Market, Available
at:https://www.anzam.org/wp-content/uploads/pdf-manager/2374_DUNFORD_RICHARD_
BSP-01.PDF
Kurnia, S. (2013) Online Grocery Shopping in Australia, Available
at:https://people.eng.unimelb.edu.au/sherahk/Papers/ITS2003.pdf
Minifie, J. (2017) Competition in Australia Too little of a good thing?, Available
at:https://grattan.edu.au/wp-content/uploads/2017/12/895-Competition-in-Australia-Too-
little-of-a-good-thing-.pdf
Morgan, R. (2017) Aldi hits new high in supermarket wars, Available
at:https://www.google.com/url?
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ets
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