Detailed Market Analysis of Aldi Supermarket in the Australian Market

This report provides a comprehensive market analysis of Aldi Supermarket in the Australian market. It begins with an executive summary and background information on Aldi, including its origins and expansion. The core of the report involves detailed analyses using PESTEL (Political, Economic, Social, Technological, Ecological, and Legal), SWOT (Strengths, Weaknesses, Opportunities, and Threats), and Porter's Five Forces models to assess Aldi's internal and external environments. The PESTEL analysis examines factors such as political and legal regulations, economic growth, social-cultural trends, technological advancements, and ecological concerns influencing Aldi's operations. The SWOT analysis highlights Aldi's strengths (low cost, convenience), weaknesses (lack of delivery, limited product assortment), opportunities (healthier product demand, store expansion), and threats (legal issues, competition). The Porter's Five Forces model evaluates the threat of new entrants, threat of substitution, bargaining power of suppliers and buyers, and competitive rivalry within the Australian grocery industry. The report concludes with findings and recommendations for Aldi to address challenges and maintain its market position, emphasizing the competitive landscape and the need for strategic adaptation.

Running head: MARKET ANALYSIS – ALDI SUPER MARKET
MARKET ANALYSIS – ALDI SUPER MARKET
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1MARKET ANALYSIS – ALDI SUPER MARKET
EXECUTIVE SUMMARY:
This report tries to investigate about the internal and external environment of Aldi Super market.
In order to identify the external environment of Aldi Super Market, Porter’s 5 forces model and
PESTEL analysis has been conducted. The porter’s five forces model gave a complete idea about
the company’s situation in Australia. The threats that are still persists with the company can also
be analysed from the poster’s five forces model. In order to understand the factors that affect the
operations of the business, PESTEL analysis has been conducted. It can also be seen that Aldi’s
operation has been affected due to the political, economic, social, technological, ecological and
environmental of Australia. SWOT analysis is also being conducted to understand the
opportunities and strengths of Aldi Super Market. This report also tries to identify the issues that
Aldi is facing in Australian grocery market. The report also recommends the policies or
strategies that Aldi can adopt in order to mitigate the rising challenges.

2MARKET ANALYSIS – ALDI SUPER MARKET
Table of Contents
BACKGROUND:................................................................................................................4
PESTEL ANALYSIS:.........................................................................................................5
 Political – Legal Environment:..................................................................................5
 Economic Environment:............................................................................................5
 Social-cultural Environment:.....................................................................................6
 Technological Environment:.....................................................................................6
 Ecological Environment:...........................................................................................7
SWOT ANALYSIS:............................................................................................................7
 Strength:.....................................................................................................................7
 Weakness:..................................................................................................................8
 Opportunity:...............................................................................................................8
 Threats:......................................................................................................................8
PORTER’S 5 FORCES MODEL:.......................................................................................9
 Threat of New Entrant:..............................................................................................9
 Threat of Substitution:...............................................................................................9
 Bargaining Power of Suppliers:.................................................................................9
 Bargaining Power of Buyers:...................................................................................10
 Competitive Rivalry:...............................................................................................10
INTERNAL ANALYSIS:.................................................................................................11

3MARKET ANALYSIS – ALDI SUPER MARKET
FINDINGS:........................................................................................................................11
CONCLUSION:................................................................................................................12
REFERENCES:.................................................................................................................13

4MARKET ANALYSIS – ALDI SUPER MARKET
BACKGROUND:
Aldi Super Market which is also known as Albrecht Discount Super Market was first
established in 1913 by Anna Albrecht in Essen, Germany. It started off as a single store and by
1948; the store started to expand and established chains in different locations. Within 20 years
the entity established more than 1000 stores all over the world. By the end of 20th century the
company established more than 1600 stores in United States only. During this period Aldi also
entered in Great Britain and Australia.
Aldi Super Market was divided into major groups. They are Aldi Nord and Aldi Sud.
Aldi Nord mainly operates from North Germany and present mostly in the countries of Northern
Europe. On the other hand Aldi Sud operates from South Germany and has its presence in
Australia, United Kingdom and other major countries of Europe.
Aldi Super Market is famous for its low prices products and also for no-frills designs.
This super market has its own labels that they use on each of their groceries. The company
adopted modern technology like cart rental system, in order to reduce the labour cost of the
company, which enabled them to reduce the cost of the product.
The main competitor of Aldi Super Market in Australia is Woolworths Group. Coles is
also one of the major contenders of Aldi Super Market. In spite of facing such high competition
Aldi still maintains its supremacy in the market due to its low cost products.
In order to understand more about Aldi Super Market both internal and external
environment analysis are being conducted in this report.

5MARKET ANALYSIS – ALDI SUPER MARKET
PESTEL ANALYSIS:
PESTEL analysis is a strategy that is used by the stakeholders to identify the macro
environment and also the future trends that are present in the field of political, social, economic,
environmental and legal environment. PESTEL analysis also assists to identify the drivers that
will affect the change. Thus, to identify the macro environment of Aldi Super Market in
Australia PESTEL analysis is being conducted.
 Political – Legal Environment:
Political factors can be considered as an uncertain factor. The decision regarding
the taxation affects any company’s financial goal. The standard code that is established
by FSANZ also affects the business of Aldi Super Market. In many cases it is seen that
government tries to protect their own country’s products and brands by implementing
new tariffs (Alfeno, Haris & Pamungkas, 2019). The implementation of new tariffs
actually affects the future of Aldi Super Market in Australia. Australian employment
policy states that any multinational company can continue their business in Australian
land if they employ Australian citizens. Another most notable problem that is rising in
Australia is the concern against the packaged foods. In order to mitigate such problem the
government of Australia increases the legal requirements, which actually affects the
business of Aldi Super Market.
 Economic Environment:
Australia is considered as the sixth fastest growing economy of the world. In
recent times Australia was able to attract new investments from worldwide. As per the
data mentioned by Australian Department of Foreign Trade, Australian economic growth
rises by 2.7% than last year (Blanco Díaz, 2019). The department also stated that the

6MARKET ANALYSIS – ALDI SUPER MARKET
current unemployment rate of Australia is 4.9%. The rise in economy also increases the
value of Australian dollar without any major fluctuations. These assist the low price
strategy of Aldi Super Market, but the rise in the prices of fuel may affect them in future.
Another major factor that may affect the future of Aldi Super Market in Australia is the
average disposable household income. As per the analysis it can be determined that the
average income disposable household income of Australia is increasing.
 Social-cultural Environment:
Due to the change in the lifestyles of residents in Australia, there is an increased
demand for packaged foods and groceries. The increase in demand led to the rise in the
revenue of the company. It can also be observed that there is a rise in the demand for
homemade products and brands. The increase in the diversity of population led to the rise
in the opportunity for the company. The major challenges that the company is facing is
the low spending culture of the residents (Dujak, Franjković & Šebalj, 2014). As per the
recent trend the residents of Australia are becoming more health concerns. These
challenges can affects the company’s revenue growth in future.
 Technological Environment:
In Australia, online shopping systems have already gained its popularity, which
actually decreases the sale revenue of the companies like Aldi Super market. In order to
attract more customers the companies can include innovations in packaging and can also
upgrade the quality of the products. The company can implement the technology in the
advertising, so that they can attract more customers from the market. Thus, Aldi Super
Market can add more new technologies that boost the sales of the company.

7MARKET ANALYSIS – ALDI SUPER MARKET
 Ecological Environment:
In spite of being very diverse nations, Australians are considered are one of the
most eco-friendly nations in the world. Australian government implemented various laws
to mitigate the problem of rising pollution (Haddock-Millar & Rigby, 2015). The rise in
the awareness also forced Australian government to ban many products like plastic bags
and other plastic products, so that they can reduce the pollution in the environment. The
change in laws regarding pollution also affects the companies like Aldi Supermarket,
because the use of products like plastic bags are very common in the system. The ban on
the plastic bags actually cost the company by considerable means.
SWOT ANALYSIS:
In order to identify the internal environment of Aldi Super Market, SWOT analysis has
been used in this report.
 Strength:
1. Aldi Super Market’s low cost are its greatest strength. In the industry where the
level of customers are increasing on daily basis, Aldi Super Market can attract
new and more customers because of their low cost products. The price cutting
strategy of Aldi Super Market has completely changed the landscape of the
Australia’s retailing industry (Ida & Partiwi, 2016).
2. The convenience that Aldi has to offer is unmatchable. In spite of providing low
price products, Aldi also offers stores in almost every corner of the country,
which enables them to attract new customers. As per a recent press release, Aldi
Super Market will invest billion dollars in Australia by the end of 2022 for
increasing their number of stores.

8MARKET ANALYSIS – ALDI SUPER MARKET
 Weakness:
1. The company’s most notable problem is that they do not provide any delivery
service. In this digital world the absence of the delivery system or any application
create a hindrance for the company. In this way the company tends to lose
competitive advantage in the industry.
2. As per a recent analysis it can be determined that Aldi Super Market has very less
assortment products (Loc, 2017). The products that are available in the store are
very limited due to which the customers were unable to do full shopping. In
comparison to Aldi Super Market other super markets provides more variety of
products.
 Opportunity:
1. In recent periods it can be observed that the consuming habits of the consumers
are changing. The consumers are more reluctant to consume healthier products. It
is a great opportunity for the company as they can introduce new organic
products, which can boost their sales.
2. As per a strategy released by Aldi, the company will invest more than billion
dollars in Australia. The investment will assist the company to establish new
stores all over the country, so that they can attract new customers from the
market.
 Threats:
Aldi Super Market is facing some serious legal issues (Manzaneque, 2014). The
rise in the problem between the management and worker union of the company is
creating a negative publicity for the company.

9MARKET ANALYSIS – ALDI SUPER MARKET
PORTER’S 5 FORCES MODEL:
 Threat of New Entrant:
Threats of new entrants are very high in grocery industry of Australia. The
competitors can easily replicate the strategy. It is being observed that in grocery industry
the companies sometimes implement their competitor’s strategy. The strategy of low
pricing of Aldi is also being copied by their competitors in several instances (Metzger,
2014). To add more there are other many companies who wants to enter in the Australian
grocery industry. In order to mitigate such high level competition Aldi needs to prepare
for the competition in the Australian market. The most notable competitors that can enter
the Australian grocery industry are Wal-Mart, Tesco, Europe Lidl and many more.
 Threat of Substitution:
Threat from substitutes can be considered as high for Aldi in Australian market.
Here are number of competitor globally and nationally who can provide tough
competition to Aldi. If the customers are not satisfied with products they can easily
switch to the substitutes. It is often observed that the customers are reluctant to change to
the substitute products if they are not satisfied with their product (Nugroho, 2018). In
some cases it is being observed that Australian grocery consumer sacrifices more money
against better quality for a specific product. Aldi, on the other hand, created an
impression of lower price and better quality among the customers. This enabled the
company to create a huge customer base.
 Bargaining Power of Suppliers:
Bargaining power of suppliers is low in the Australian grocery industry. Grocery
industry provides in numerous suppliers who offers same types of services that Aldi

10MARKET ANALYSIS – ALDI SUPER MARKET
offers to its customers (Otieno, 2018). The only thing that other supplier will fail to
provide is the low price products. In this scenario Aldi will have the upper hand, but if
any other supplier adopts same kind of strategy then Aldi loses their customers.
 Bargaining Power of Buyers:
Bargaining power of buyers is moderate in Australian market. There are number
of buyers in the market. Similarly there are number of product options are available to the
customers. Thus, the consumers can easily switch suppliers. This makes buyers reluctant
to switch from one band to another. Consumers in Australia are very much price oriented
and thus, they prefer Aldi more than other suppliers because Aldi can able to provide low
cost products at highest quality.
 Competitive Rivalry:
After analysing Australian grocery industry it is clear that there is an existence of
high competition in the industry. Aldi faces high competition in Australian market from
some of the giants like Coles, Woolsworth and many more. Aldi can also expect the
entrance of new competition in the industry. The big giants like Wal-Mart, Tesco are
aspiring to enter into the Australian grocery industry. Thus, the level of competition
among the competitor is very high and this competition can rise much higher in
future.
Thus, it can be stated that Australian grocery market has very high competition
and reluctant to change customers. Aldi’s strategy of low price and high quality can make
them stand on high ground in comparison to their competitors. In order to maintain their
supremacy in the market the company need to develop themselves on continuous basis.

11MARKET ANALYSIS – ALDI SUPER MARKET
INTERNAL ANALYSIS:
The internal environment of Aldi plays a huge role behind the company’s performance in
the market. The main attributes of the internal environment are sufficient capacities, feasible
mechanisms, and resources that assist them to conduct daily activities of the business. The main
activities of the organization are sales, distribution network and after sale service. Aldi
efficiently regulates the primary activities of the organization, which enables them to provide
high amount of service to their customers. Thus, Aldi does not faces strategic issues in the
market.
Aldi is famous for offering wide variety of product to their customers. Aldi also ensures
that the cost of the company reduces and efficiencies of their services increase. The supply chain
activities of Aldi are well supported by good infrastructure and excellent human resource
management. In order to reduce the cost, Aldi efficiently manages their finance. The introduction
of new techniques like activity based costing techniques enabled them to reduce the costs more
efficiently. The proper strategy and planning enables the company to maintain their internal
environment. The major assets that Aldi possess are the inventory and cash. The financial
efficiency minimizes the cost of operation (Schmid, Kotulla & Orban, 2018). The ability of the
company to clear off their debts is high, which can easily be visible from other the annual report
of the company. Aldi also holds intangible assets like goodwill, innovation and other resource
management.
FINDINGS:
After analysing the internal environment and external environment of Aldi Super Market,
it can be determined that the company is facing lots of issues, especially in Australia. The main
external environment issues that the company is facing are the entrants of new competitors in the

12MARKET ANALYSIS – ALDI SUPER MARKET
industry. Some of the giants like Wal-Mart, Tesco are trying to enter into Australian market. If
these companies succeed in entering the grocery industry of Australia then Aldi could lose
considerable amount of customers (Sup, 2015). In order to mitigate such issues Aldi should
develop themselves by relying in technology. Aldi could start their online shopping app, so that
they can attract more new customers. On the other hand Aldi does not face any issues regarding
the internal environment.
CONCLUSION:
As per the above discussion it can be stated that Aldi has a very strong internal
environment. This strong internal environment enables Aldi to maintain their supply chain. The
strong supply chain assists Aldi to reduce the cost of the product. This enables them to offer low
price product at high quality. This will be the key attribute that will assist Aldi to compete with
the existence competitors and new entrant in the market. Aldi also needs to develop their
strategy, so that they can maintain their supremacy in the Australian industry.

13MARKET ANALYSIS – ALDI SUPER MARKET
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