Aldi Strategic Analysis Essay

2566 Words Oct 13th, 2012 11 Pages
In 1948, the brothers Theo and Karl Albrecht opened the grocery store ‘Albrecht Discounts' (Aldi) in Essen (Ruhr Valley), Germany. The store had a simple layout and provided a great deal of products at a low price. The company grew rapidly, owning 13 stores in 1950 and about 300 stores in 1961 across Germany.
In 1961, Theo and Karl divided the company into Aldi North (run by Theo) and Aldi South (run by Karl). The reasons for this division, according to Dieter Brandes, a former managing director of Aldi in Schleswig-Holstein, Germany, were different views about how to develop the business. However, the brothers normally exchanged information about a range of issues such as performance and cost figures, current and potential suppliers and
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For instance, Aldi has competition from companies like Asda or Tesco that can provide substitutes for their goods. This may drives a low-price of groceries in both companies.
Competitors' analysis
Aldi not only faces the competition of strong supermarkets such as Tesco, but also faces the threat of Lidl as the discount store.
In 2008, Tesco launched a new strategy that setting 34 discount brands across 350 categories and reduce its price to attract more customers to purchase products in Tesco in order to defend the price war of Aldi (Reuters, 2008). After that, the sales of Tesco has increased by 6.7 percent according to researchers TNS World panel reported (Reuters, 2008). Furthermore, Tesco possible offers great range of discount brands in the future, and negotiates with more suppliers to decrease the price of goods in order to gain more market share. Tesco has applied another strategy that it has opened 24 hours Tesco express to service for consumers to buy products in the evening, which also increase the sales of products in Tesco. Considering this situation, Tesco will be the core competitor for Aldi. Therefore, Aldi should pay more attention to Tesco's development.
Beside the competition of Tesco, Aldi also faces the strong competition from Lidl as one of the largest grocery retailers in Europe, because Lidl has almost the same target customers and similar sales strategy

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