Aldi: The Discount Supermarket Giant In UK

Background of Aldi

Aldi is commonly known for discount supermarket chains across 20 countries and has more than 10,000 stores. The company has been estimated turnover of more than 50 billion euros. Aldi has been divided into two operations Aldi Nord’s and Aldi Suds. At the end of January 2022, Aldi’s growth has been significantly increasing by 1.1 % from the previous year. Aldi has also been recognized as the most positive brand in 2019 in supermarkets (Statista, 2022). Aldi has been doing successful business in the UK providing groceries and other homeware items meeting the requirements of each consumer irrespective of income and class.

Aldi was founded by two brothers and especially started as a family-owned business in 1946. The business was further separated into two further groups where Aldi Nord operates in western, northern, and eastern Germany, and Aldi Sud operates in western and southern Germany. In total, the company has more than 100 stores in every region in the UK. Aldi is operating its service in the retail sector. Aldi offers its customers groceries, stationery, Health care, baby products, electronic and household products. Aldi has 66 operated self-serve gas stations in the UK.  The main consumers of Aldi are middle-income group customers positing themselves as the economical retail store. Aldi Sud is operating in the UK and has 6520 stores across 11 countries (Aldi, 2022).

The main strength of the company is the efficient pricing of its key assets through automating various stages of production. This has led the brand in opening discount stores for its consumers and provides a pricing edge over other competitors (Armstrong et al., 2020).

Aldi has a strong distribution chain in delivering products to its consumers and the company also focuses on promoting its products through training and development.

The company has a strong social media presence of around 25% providing valuable deals to its customers in household items. The company also offers a diverse product portfolio of discounted products to its customers.

• The company has been dependent on its sales volume and employees have to work long shift hours and are generally paid less.
• The company has a small market presence and also has a lesser number of stores in the UK than its competitors like Sainsbury’s and Tesco (Schmid et al., 2018).
• The brand association of Aldi is promoted with inexpensive and low-grade items preferably for low-wage families failing to cater to the high-class family’s needs and requirements (Simkin, L., 2016).

• The company should prefer to diversify its stores in different segments analysing the requirements of each section of customers to improve the target audience.
• Aldi should involve itself in providing products of premium pricing that will cater to the niche segment of customers preferably consumers wanting premium services.
• Due to pandemic and economic instability, Aldi has an opportunity to cater to more audiences as consumers are reliable in budget pricing and Aldi’s expansion of stores in the UK can be beneficial for the brand (Jenkins and Williamson, 2015).

• Aldi’s main threats are its competitors including Lidl and Walmart that is acquiring other brands to expand their market reach capabilities and diversify their services in different products segments.
• Aldi should market its position in the online segment more firmly as most of the consumers are depending on getting shopping experience through an online segment in recent times (Fernie, Fernie and Moore, 2015).

• Political Factors include political conflict and the relationship between the trade of countries including taxes. The situation between the UK and the European Council is no exception. Aldi Ltd. Businesses can get an impact due to these political issues which provide vulnerability to brand market share in the UK (Schmid et al., 2018).

• The cost of food has increased by 2.10 % in November 2019. This economic incident pushes consumers to buy cheaper foods from brands like Aldi which can be a growth driver for the brand. Due to pandemic and increasing inflation discounts shops like Aldi has more chance in expanding their business in the UK (Pettinger, 2020).

• The taste and preference of consumers are changing after the pandemic as consumers are mostly onto nutritional food products and are becoming health conscious. Aldi brand should consider providing high-quality foods at reasonable pricing to increase its value and image in the UK market (Pettinger, 2020).

• Technological advancements are very necessary to bring innovation in the marketplace and at the same time provide consumers with new methods of shopping. Aldi should provide new stores which have a self-billing option, a new cashless transactions system, and a green store to expand its sales of discount stores across the UK (Czinkota et al., 2021).

• Natural disasters and an increase in carbon footprint can impact the performance of the brand. Aldi should constantly measure new steps in decreasing the carbon footprint and should use renewable energy to operate its stores for gaining more competitive advantage through promoting sustainability.

• Legal factors include the taxation policy of the UK government in food pricing which can impact the strategy of a brand like Aldi which is providing consumers value products at low discounted prices (Hood, Clarke and Clarke, 2016).

• Aldi has marketed its products as affordable and of the same quality as other branded products. Aldi sources its products from different suppliers and then branded the product in their name taking a low-profit margin that enables the brand in gaining a competitive advantage in providing consumers with various household and food items at low prices (Unser, 2020).

• The key strategy of Pricing of Aldi is Competitive Pricing. The company buys products in great volume and offers the same quality to its customers by reducing fixed costs. The company has also managed to negotiate with its suppliers for the best possible price and enables economies of scale for the brand (Ododo, Mulholland and Turner, 2015).

• Aldi has managed to keep its store’s layouts simple to keep costs down and also to limit waste. Aldi has managed to position its shops on edge of the town centre locations with good visibility and not too many competitors. The stores are located in transport links and parking spaces for the convenience of consumers (Lon, 2016).

• Aldi’s promotional activities include above-the-line promotions and paid for advertising mainly targeting a mass audience. These include television, magazine, billboards, and newspapers. The company also uses Below-the-line marketing promotions like social media, email marketing, and third-party endorsements and awards. Aldi swap and save and Like Brands’ marketing campaigns are improving brand perceptions (Karabaza and Yegorova, 2016).  

• Aldi has segmented its market concerning the people who look out to purchase groceries and products at competitive prices. Through Demographic and behavioural segmenting Aldi has captured the needs of customers in a reasonable factor through planning and execution of discount stores in specified areas. Competitive pricing and cost leadership strategy is the key strength of Aldi as it offers products at very cheap prices compared to its competitors through its outstanding supply chain management system. Hence, it has segmented its market on behalf of the middle-income and lower-income group customers (Azeem et al., 2019).

• Aldi targets the mass market which includes household individuals including all the family members. The target customers are the middle-income group who looks for products at a heavily discounted price. Compared to other retail stores like Walmart, Aldi offers products 30 % cheaper rate to its customers. It caters to all age groups from 18 to 65 years and targets both men and women in the market (Sarisa, 2021).

• Aldi positions itself through its private labels in the minds of the customers and signifies its discount store image to its target audience. The logo of Aldi has itself created a recognition in the customer’s minds about the perks and benefits that the company provides to its customers. Aldi promoted itself using ATL and BTL activities and organizes multiple campaigns to reach out to all the audiences in the market. marketing campaigns and surveys have been adopted by Aldi to gain insight into customers’ perceptions towards the brand (Unser, 2020).

• Aldi should consider expanding its stores in the UK especially diverse stores like Tesco catering to every class and income consumers for more visibility of target audiences and catering to more urban and rural groups.
• Aldi should bring innovative techniques to ease the shopping experience of customers in its retail stores for example cashless stores and new integration of apps for specialized products for better search results of its product portfolio in the online segment.
• Aldi should also consider targeting premium segments customers like its rivals providing stores and products catering to upper-income consumers to increase its market audience reach in the UK.

Conclusion

The above report has discussed the brand called Aldi in the UK market. Aldi has been dominating in European regions through its cost-cutting strategy and providing quality products to its consumers, The brand has been constantly pushing its brand image offering its consumers discounts and sales in their shops, and has created a strong social media marketing presence. Aldi has a unique distinctive approach to retailing that has provided the brand with a competitive advantage in a crowded marketplace like the UK. Aldi has also sustainably balanced its marketing mix for long-term growth providing customers with its own branded materials at an affordable rate. The company’s multi-channel promotion activity has created many loyal customers of the brand in the retail sector and also helped the brand in engaging and creating positive feedback for the brand.

References 

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Ododo, C., Mulholland, G. and Turner, J., 2015, November. Can Discount Pricing Be A Comeptitive Brand Strategy? An Evaluation of Aldi. In International Conference on Marketing and Business Development (Vol. 1, No. 1, pp. 241-251). Bucharest University of Economic Studies Publishing House.

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Sarisa, L., 2021. Business strategies in the retail supermarkets industry: A comparative case study analysis of Costco and Aldi.

Schmid, S., Dauth, T., Kotulla, T. and Orban, F., 2018. Aldi and Lidl: from Germany to the rest of the world. In Internationalization of Business (pp. 81-98). Springer, Cham.

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<https://www.statista.com/statistics/386763/aldi-sales-percentage-change-great-britain-uk/> [Accessed 19 March 2022].

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