Aldi: Dark Horse Encounter Essay

1872 Words Nov 18th, 2014 8 Pages
1. Porter’s Five Forces Model in USA Supermarket Industry

• The Threat of New Entrance (Low)

In the USA supermarket industry, the threat of a new entrance is relatively low. This consideration is achieved by the advantages that already had by the incumbents. For example, Walmart that was considered as a leader in sales for supermarket in USA,[1] Walmart even already grasped the US market share in 1990 with 41%[2], Walmart had a market presence, buying power and breadth of inventory. Moreover, Walmart also spent large amount of capital investment for its IT division and distribution logistics. Walmarts had IT capability to check individual product sales. In consequences, Walmart is the only retailer that can provide real-time
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• The Bargaining Power of Buyers (Moderate to high)

The fierce of competitions between the Walmart, Kroger, Safeway (supermarket chain), ALDI, Trader Joe’s (discount grocery store), Costco (warehouse store) obviously give an advantage position for the customers. Customers have many options to buy basic things for daily life from meat, milk to toiletry. In the end, it depends on the customer buying power and preferences. If the customers loyal to national brands item they will choose shopping in supermarket, while for the customer that do not mind with the private brand as long as the taste is good and especially with the cheaper price, a discount grocery store like ALDI is the best option. Moreover, supermarket or discount grocery store provide similar product, so the competition is not different between supermarket like Kroger, Target, Walmart with discount grocery store like ALDI. In consequences, they are competing each other.


• The Bargaining Supplier Power (Low)

With the dominance in the market share, Walmart enjoys the advantage when they have to negotiate with the suppliers. This condition makes the bargaining power of the supplier for Walmart is very low. It is not a surprise when Walmart failed in German’s market and pulled out because of the stronger regulation and different way to bargain with the supplier compared to US’s market. Moreover, the popularity of the supermarkets like…

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