Aldi- THE GERMAN WALMART

Albrecht Discounts

SHOP ALDI SMART

Aldi background

• Aldi, short for Albrecht Discounts, is actually two companies, Aldi Sud and Aldi Nord. Started in Essen,Germany after world war II.

• Aldi offer the basic necessities through its grocery stores.

• By the early 21st century, Aldi had global presence through its 7000 stores.

• Aldi Süd manages expansion in English speaking countries and Austria, which borders

its operations in Southern Germany.

• Aldi Nord manages expansion in the rest of Europe as well as Northern Germany.

• The divisions were run by the Albrecht brothers Karl (Sud) and Theo (Nord) until 2003.

Aldi Süd logo

Aldi Nord logo

BusinessModel

4Ps

Product

Price

Place

Promotion

“our unique way of operating makes it virtually impossible for competitors to match our combination of price and quality.”

“Our unique way of operating makes

it virtually impossible for competitors

to match our combination of price and quality.”

Aldi stock 70 to 1000 products. Each product category has only one brand

& a restricted variety. Only 15% are the national brands rest are

private labels. No compromise with the quality & PL are

as good as the established brands. Private labels are produced by well-known

brand manufacturers.(Eg.Kellogg)

PL :Millville,Casa Mamita,Snack Rite,Schoko Chips,Schoco Flakes

Limited products, stronger control on the quality & price.

Limited products also eases shipping & handling.

Surprise buy

Product

Price

LESS IS MORE FOR ALDI

“We sell at the lowest possible price,”

• Aldi was managed solely on the basis of lowest price.

• Act as a hard discounter .

• Aldi sell its product at the price 30% lower that of the national brands.

• Provides and target people who seeks value for money.

• Aldi is able to keep low prices bcoz it buys in bulk , & cut in store cost.

Save warehousing cost., remain close on sunday and bank holidays,expansion

with its cash flow.

• No frills, no aisle decoration.

Place

• Aldi stores are generally 15000 sqft.

• Aldi’s product variety is limited ,customers spend less time to pick

up their merchandising and thus keeping the movement easy and

quick.

• Keeping the store small also make the choice of a site easy.

• Aldi generally leases or buys the stores that have capacity less than required to get a presence in a particular market.

• Aldi spends minimum on marketing and advertising i.e., less than 0.5% of its annual turnover.

• Aldi has traditionally relied on catalogues, local press advertising and web updates to generate word of mouth.

• Aldi used two page color advertising particularly in local suburban give-away newspapers.

• They have also delivered the full color leaflet used in store to householders' letterboxes in store localities.

• As of June 2009, they have started a television commercial campaign advertising Aldi's slogan "Smarter Shopping"

Promotion

Aldi store characteristics Both Aldi companies operate with the

same limited assortment, private label

strategy. A typical store is about 15,000 sq. ft.

(1,000-1,500 sq. m.) with as few as 700

products and as much as 95% of it

private label. Aldi’s well-developed private label skill

has created a competitive advantage

with a combination of low prices at a

high standard of quality.

Aldi SWOT AnalysisStrength

• Simple consumer proposition based on price.• Procurement, range management and logistics.• Low cost base.• In-store availability.• Strong domestic position.• Decentralized structure.• Portfolio modernization

Weaknesses

• Remains niche player in many overseas markets.• Domestic performance.• Adaptability of Aldi Nord vs. that of Aldi Süd.• Reliance on one format in majority of markets.• Excess non-food stock.• Limited range of SKUs.• Customer service

Opportunities

• Global sourcing.• US expansion.• European expansion and new market entries.• Range adaptation.• Relationships with branded manufacturers.• Develop town centre offering

Threats

• Lost international first-mover advantage to Lidl.• Price competition.• Other global retailers’ discount formats.• Soft discounters.• Retailer consolidation.• Changing demographics

FAST CHECKOUT

Sells only about 700 high volume products.

Sells mostly store brands for maximum control & safety.

Thinly staffed stores, non-union workers.

Minimal advertising, zero public relation.

Expansion financed from cash flow, very low debt.

Small stores format makes it easy to find sites.

The Aldi Formula

Impact bigger than Wal-Mart?

In ways, Aldi impact on the

marketplace, notably on suppliers, may

be bigger than Wal-Mart.

Their impact is multiplied because of

their focus on so few sku’s – 700 to 1,200 – compared with 28,000 to

125,000 sku’s for Wal-Mart’s various formats.

That means that Aldi and purchasing power per sku can be several times that of Wal-Mart.

As a result, in certain sku’s, Aldi can eclipse Wal-Mart’s ability to squeeze suppliers and cut prices.

Characteristics of a hard discounter

• Low price own label

• Flexible small store format.

• High %age margin.

• Hard discounters like to buy centrally with the bigger Manufacturer.

• Hard discounters conduct weekly competitor pricing audits for being are of competitors pricing and assortments.

Hard Discounter(aldi) vs Discounter(walmart)Comparables Aldi Wal-mart• Coupon Does not accept coupon Accept coupon at its face value

•Loyalty cars None None

• store brands 90% of product are pl 1650 private labels like Equate Sam’s choice and Great value

•Senior discount No No

•B1G1 promotion Does not offer this promotion Does not offer this promotion.

•Store hours Mon-thu,sat:9am-7pmFri:9am-8pm

Open 24 hrs

•Free coffee No Depends on store

•Scanner error No yes

•Store amenities Do not accept checks or coupons and they charge for bags unless you bring your own.

Accept checks and coupons

•Is the price pre unit market on the shelf?

Yes Yes

What product or service attract people to your store?

Every day super low prices Pl products are extremely popular.

ZONE MODEL OF DIFFERENTIATION

SECURITY ZONE

PROFILING ZONE

EARLY RECOGNITION ZONE

SHOP LAYOUT

PRICE

ASSORTMENT ADVERTISING

SERVICES

TECHNOLOGY

STAFFSHOP

LOCATION

GOALS

Customer satisfactionCustomer interestCustomer loyalty

“ In Conclusion we would like to leave you with a Question”

Do you think Aldi will survive in the long run with its strategies?

NAVEEN AND PREETI

THANK YOU !