Aldi's Competitive Strategy

This assignment analyzes Aldi's successful competitive strategy in the grocery market. It examines their focus on affordable pricing, limited product selection, and efficient store operations to attract budget-conscious customers. The analysis also explores Aldi's potential for future growth and expansion strategies over a 10-year horizon.

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.Executive Summary
The report aims to look into the marketing strategies adopted by an organization, since their
inception and possible options they can consider to be successful for the next 10 years. Aldi, a
common brand of two globally leading discount supermarket chains, operating in and around 18
countries with 10000 stores, is considered for preparing the report. Aldi is a company based in
Germany and was founded by brothers, Karl and Theo Albrecht in the year 1946. They have got
an estimated turnover of more than 50 billion euro. In the year 1960, the business got split into
two groups, which later went to become Aldi Nord, having their headquarter in Essen and Aldi
Sud, headquartered in Mulheim. Through this report, the Aldi Australia experience would be
taken into account. Aldi Sud operates in Australia, as Aldi. A company’s marketing strategy
would encompass all the marketing activities, with regard to medium, short and long term
activities in the field of marketing. The report concludes by understanding the importance of
formulating proper marketing strategies for an organization to succeed and maintain their
position and also gauge the crucial aspect of maintaining the success for a period of 10 years.

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Table of Contents
1. Introduction..............................................................................................................................3
2. Discussion................................................................................................................................4
2.1 Background to the Company...............................................................................................4
2.2 Marketing Analysis.............................................................................................................5
i) Nature of Aldi’s Marketing Strategy or Strategies since it began........................................5
ii) Strategic Marketing Options For Aldi Moving Forward..................................................7
3. Conclusion................................................................................................................................9
4. References..............................................................................................................................10
5. Appendix....................................................................................................................................12

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1. Introduction
Marketing strategy is nothing but the formulation of plans and procedures, which an
organization needs to follow, for achieving the goal of increasing the sales, which would lead to
an increase in revenue and thereby develop a competitive advantage. The strategy requires to
consider short, medium and long term goals activities related to the field of marketing, analyze
the intial strategic position of a company, then formulate, evaluate and select the appropriate
strategy, which would contribute to the goals of the company and fulfill the marketing objectives
(Armstrong et al. 2014).
Aldi, the organization considered for the report is a common brand for two leading global
supermarket chains. The company was founded by two brothers, Karl and Theo Albrecht in
1946, when they had taken over their mother’s store in Essen, which had been operating since
the year 1913 (Brandes and Brandes 2012). The business got split into two separate groups in the
year 1960, which later became Aldi Nord and Aldi Sud. Through this report, different marketing
strategies which have been adopted since their inception would be discussed, with special focus
on Aldi Australia and also discuss about the options which the organization, Aldi can adopt to
achieve success over a long period of 10 years.
Thus the report would conclude that adopting the right marketing strategies is a must for
any organization to excel and achieve the pre-defined goals and objectives. Aldi, being a global
organization needs to take into account certain options which would definitely help them in
tasting success and thereby maintain their position for a 10 year period.

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2. Discussion
2.1 Background to the Company
Aldi is a common brand for two globally leading supermarket chains, having over
10000 stores in 18 countries across the world with a combined turnover of 50 billion
euros. The organization is based in Germany, with the chain being founded by two
brothers named, Karl Albrecht and Theo Albrecht in 1946, after they had taken over their
mother’s store in Essen, which had commenced operations from the year, 1913 (Fitzroy
et al. 2012). The business got split into two groups, Aldi Sud and Aldi Nord, with
headquarters in Mulheim and Essen respectively. Aldi Sud and Aldi Nord’s operations in
Germany, have been separate, both legally and financially since 1966. There are 35
regional companies of Aldi Nord, with around 2500 stores located across the Eastern,
Western and Northern Germany. Aldi Sud has 32 regional companies, comprising of
1600 stores across Western and Southern Germany (Hurth et al. 2015).
On a worldwide scale, Aldi Nord has their operations in France, Denmark,
Poland, Iberian Peninsula and the economic union in Western Europe, better known as
the Benelux countries, whereas Aldi Sud operates in Australia, Ireland, Hungary, Great
Britain, Austria, Switzerland and Slovenia. Aldi Nord and Aldi Sud both operate in
United States, having around 1600 stores as of the current year. Aldi Nord owns Trader
Joe’s chain and Aldi Sud carries out their operations in the name of Aldi (Jones, Comfort
and Hillier 2012).
Aldi primarily started to expand globally in the year 1967, when the grocery
chain, Hofer was acquired by Aldi Sud in Austria. The first store opened by Aldi Nord,

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was in Netherlands, in the year 1973, followed by other nations across the world. Aldi
opened their United States chapter, by setting up the first store in Iowa, in the year 1976
and Trader Joes got acquired by Aldi Nord in 1979 (Kapferer 2012). Aldi began
expanding rapidly after East and West Germany got unified to form one single nation.
Post the retirements of the two brothers as CEOs in the year 1993, the company had come
under the control of two private family foundations named Siepmann Foundation and
Marcus Foundation. Where, Siepmann Foundation handled the operations of Aldi Sud,
Markus Foundation took care of Aldi Nord (Kasai and Chauke 2017).
2.2 Marketing Analysis
Market analysis refers to assessing the market from both qualitative and
quantitative point of views. This takes into consideration the size of a market both in terms of
volume and in value, the segments in which the customers can be divided, their buying patterns,
the competition involved and the economic environment related to entry barriers and related
regulations.
i) Nature of Aldi’s Marketing Strategy or Strategies since it began
Aldi, the global supermarket has been operating in Australia since 2001, having
over 400 stores providing employment to over 9000 employees. The company has been focused
in providing customers with limited range of high quality grocery products, offered in
substantially low prices, thereby giving the customers, smarter ways to get their shopping done.
Keeping in line with the strategies formulated, Aldi has always looked to target the low income
group of customers, who get attracted through the displays put up in their stores. The strategies
followed by the company in Australia, were similar to the ones adopted by them in Germany,
with slight modifications (Levsen 2015).

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Aldi was officially rated by Grocery Choice as the best value supermarket and the
cheapest for basic staple products in Australia. If the year 2008 is considered, Aldi was regarded
as one of the top ten retailers in Australia. The company carried out their businesses in Australia
through limited partnerships with the profit or loss figures not getting revealed. More than 1
million customers visited the stores of Aldi in a week in Australia, as of 2008, with the estimated
sales figures of $2 billion. The company had literally carried out their operations without making
any substantial profit for years. Aldi’s two of the biggest competitors have been Coles and
Woolworths, who are primarily into the businesses of credit cards, hardware, hotels and petrol
(Peck et al. 2013). Through their strategy of offering quality grocery products at low prices, they
have won the hearts and minds of customers across Australia and in an attempt to compete with
Coles and Woolworths and grab more market share, they have started to expand their reach to
middle income group people.
Aldi has always given a sense of familiarity to their customers, as and when they have
entered the stores. They have ensured to make their brands very easily recognizable. Another
exceptional strategy which the organization follows, is to provide the customers with minimum
choices. Each item has one or two types, thus enabling people to spend less time in selecting
their preferred product, thereby getting rid of the price variables. The company ensures that their
floor sizes are kept small, compared to their competitors, which invariably makes shopping a
simple affair for the customers, without their precious times getting wasted (Peck et al. 2015).
The simpler shopping experience with customers getting exactly what they want, without getting
distracted by other brands have been ideal strategies executed by Aldi for the people of Australia.
As far as the pricing is concerned, Aldi’s products have been found to be on an average, 19%

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cheaper than the branded items offered by Coles and 28% cheaper than the items offered by
Woolworths. This is where Aldi scores more than other supermarkets.
What has set Aldi apart from other stores, is their ability to position themselves better on
the minds of the customers. They carry out their job of doing business in a different manner
compared to the competitors. Their own brand labels with limited product range help create a
sense of uniqueness. Differentiation, focus strategy and cost leadership combine to form their
strategy for positioning. They have done away with the concept of self-service checkouts, which
still exist in Coles and Woolworths.
ii) Strategic Marketing Options For Aldi Moving Forward
For any organization to remain successful over a substantial period of time,
commitment and quality plays a huge role. Getting established and earning accolades from
customers on a global level is one thing, maintaining the stature through providing quality
products within affordable price range over a 10 year period is a different thing altogether.
Business environment is changing rapidly and this calls for changes in the marketing strategies,
which managements of every organization needs to make, in order to have an edge over their
competitors for maintaining their image in a highly competitive work environment. The same
applies to Aldi, which has already started expanding their operations since February 2016, by
opening more stores in South Australia.
Aldi has set themselves apart from Woolworths and Coles by being advantageous
to customers in terms of pricing and sticking to their policy of providing quality grocery products
for affordable or low prices. Their usage of private labels, make up 20% of supermarket brands.
The expectation is, that the private labels are supposed to grow to 35% of all grocery and food

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sales in Australia by 2020-21. The change could be seen in customers’ attitudes where they are
increasingly getting inclined towards favoring groceries labeled by private companies, compared
to bigger brands. The appeal which Aldi stores generate, has helped to create fans out of their
regular customers (Dwivedi et al. 2012)..
Aldi’s ability to position themselves differently on the minds of the customers,
compared to their competitors Woolworths and Coles, would help to keep them in good stead for
carrying out their operations across the world profitably. Business is run by the values and the
ethos developed over time by constantly providing quality products in affordable prices, thus
earning the trust of the customers. These practices help customers in developing belief and
understand the organization’s style of doing business. If they want to carry out their business in
same wavelength, as they have been doing since their inception, for the next decade, then Aldi
has to stick to their unique strategy of providing quality products in affordable prices and
continue to win the hearts and customers. Happy customers, in terms of the ease with which they
do their shopping and the low prices they get charged for quality products, go a long way in
deepening their relationship with the organization and thereby lead to growth and expansion
(Perrone and Wodonga 2015).
Aldi can have a sustainable edge over the customers over years to come, if they
can expand their business to locations, untouched by their competitors. Their low pricing
strategy, combined with quality products would help them immensely to achieve success by
earning more profit. Over the years, the company has excelled by positioning themselves to low
profile customers, gradually moving into the middle income group segment. Continuing with the
same strategy would work wonders for the organization. A proper market survey of the new

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places, where they would like to explore, will go a long way in understanding customers’
psyches and thus targeting would become a lot easier.
3. Conclusion
Through this report, the marketing strategies adopted by Aldi and the strategic
marketing options which they can adopt to remain successful for the next ten years have been
discussed in detail. Right marketing strategy is a must for any company to excel and create a
sustainable advantage over their competitors and be successful. The unique strategy of
providing quality products in affordable prices has helped establish trust and authenticity
among the segment of customers, who primarily belong to low income group. In an attempt
to compete on similar ground with two of their competitors, Coles and Woolworths, Aldi had
even targeted the middle income group people. Their ability to provide customers with the
ease of shopping through small outlets and providing only one or two varieties of products
help save precious time and energy for the customers. This helps the customers to get
attracted towards Aldi’s stores, thus leading to higher sales and revenue. They have certainly
created a position for themselves in the grocery products segment. This report has also drawn
the conclusion on the different options which Aldi can adopt to be successful over a period of
10 years. They can certainly keep on following the strategy of providing quality products in
affordable prices to attract the customers’ attention and could also look to expand their reach
by opening stores in locations, not yet covered.

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4. References
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing.
Pearson Australia.
Brandes, D. and Brandes, N., 2012. Bare essentials: the Aldi way to retail success. BoD–
Books on Demand.
Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and
relationship equities and loyalty-intentions in the Australian supermarket
industry. Journal of Retailing and Consumer Services, 19(5), pp.526-536.
Fitzroy, P., Hulbert, J.M., Hulbert, J., Ghobadian, A. and O'Shannassy, T.,
2012. Strategic management: The challenge of creating value. Routledge.
Hurth, V., Peck, J., Jackman, D. and Wensing, E., 2015. Reforming marketing for
sustainability: towards a framework for evolved marketing.
Jones, P., Comfort, D. and Hillier, D., 2012. Sustainability in the European shop
window. European Retail Research, pp.1-19.
Kapferer, J.N., 2012. The new strategic brand management: Advanced insights and
strategic thinking. Kogan page publishers.
Kasai, C. and Chauke, X.D., 2017. Investigating Customer Perceptions of Loyalty Cards
and their Influence on Purchasing Behaviour in Major Retail Stores. Journal of
Marketing and HR, 5(1), pp.302-324.
Levsen, N., 2015. Case Studies: Early Adoption Patterns and Lead Markets. In Lead
Markets in Age-Based Innovations (pp. 51-97). Springer Fachmedien Wiesbaden.

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Peck, H., Christopher, M., Clark, M. and Payne, A., 2013. Relationship marketing.
Taylor & Francis.
Peck, J., Hurth, V., Wensing, E. and Jackman, E., 2015. Reforming marketing for
sustainability: towards a framework for evolved marketing. Reforming marketing for
sustainability: towards a framework for evolved marketing.
Perrone, A. and Wodonga, T.A.F.E., 2015. Centralian College: Creating a strategic
marketing plan for long-term growth. Marketing, p.85.

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5. Appendix

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