Aldi: The dark horse discounter Harvard Case Solution & Analysis

Aldi: The dark horse discounter Case Study Solution

Aldi’s Strategy:

Aldi follows its own set of standard actions as well as values making it unique organizational strategy. The strategy of business and operating model revolves around 3 core factors i.e. low prices, strong culture and efficient operations. Current business strategy significantly utilize efficiency model based on low cost with minimal emphasis on advertising. To give a strong threat of competition in the retail market of the United States and all over the world, Aldi has decided to expanded its number of stores in the United States through provision of private label productions of high quality and to control the redundant expenditures guaranteeing the lower product price to be the top retailer in upcoming years. Such strategic approach concludes the aim, scope and the potential outcomes illustrating the Aldi goal in a specified time period with the aim of gaining a sustainable competitive advantage.

Localization of Aldi’s stores:

Locating Aldi stores in the United States must not be in accordance with the Wal-Mart stores. Since the product prices offered by Aldi are quite cheaper in comparison to the product prices offered by Wal-Mart. Therefore, the requirement of developing a plan for locating stores of Aldi needs to be done in consideration with the presence of Wal-Mart stores areas. Despite the process of locating Aldi stores should be in the locations with heavy traffic to gain the advantage over its efficiency model based on low cost. Each store must continue with about four employees in some stores in order to efficiently minimize the cost of wages. Aldi should focus on the opening of 100 new stores a year to obtain a significant competitive advantage in the retail market of the United States. Similarly, the opening of Aldi stores in rural and urban areas might tend to be an effective strategic approach in increasing its sales as most of the population seek out high-quality brand products within low price ranges.

Recommendations:

Considering the above analysis, a set of recommendation for Aldi to win the retail market in the United States includes the requirement to provide store brands with assured products like Lucky Charms. Additionally, Aldi can offer its customers with more assortments by increasing the size of its stores to make them more attractive. Opening of new stores must be based on selecting customizable locations for particular markets in the United States. Need of market research is required for determination of market needs thus increasing the supply of those specified products. Similarly, incentivizing local customers for purchasing Aldi products meeting their perception of low price products. Additionally, Aldi must focus on maintenance of its pricing competitive edge and increase offering of brands through private labels.

Aldi’s current approach:

Currently, Aldi has an approximate of 1800 stores in about 35 different states with a great focus on expansion on the business primarily in California, Florida, Mid-Atlantic and Midwest. Aldi has been making noticeable efforts to be the third largest supermarket of America behind Wal-Mart and Kroger with an estimated opening of about 2500 stores by the end of 2022. Additionally, the intensity of the competition is expected to rise due to the entrance of another German Grocer –Lidl, the close competitor of Aldi with the business model based on low-cost in the United States. (Nathaniel Meyersohn, 2019)

Conclusion:

As the retail market of the United States is the home of Wal-Mart like Germany is the home of Aldi due to difference in the consumer values. Both the retailers have their differentiated advantage with the reverse of some of the strengths. Aldi has the potential to grow as it has shown its growth by increase in the number of stores. A set of recommendation for Aldi to win the retail market in the United States has been advised – Appendix B.

Appendices:

Appendix A –Difference in Aldi and Wal-Mart

Appendix B – Recommendations

Appendix C – Price comparison of 40 common Goods from 2017-2019

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