Program & Batch: PGDM 2017-19

Term: V
Course Name: Retail Management
Name of the Faculty: Sita Mishra
Topic: Assignment 2: “Aldi” (Case Study)
Submitted By: Aparna Laddha
170101017
Section A

Aldi: The Dark Horse

Discounter

Brief overview
 Aldi was Germany’s privately held store which originated in 1948.
 Its penchant for secrecy made it world’s least known discount grocer in 2013
 Since the start it has followed a low-cost model by keeping a few number of SKUs of
basic items as compared to other low-cost retail players.
 The frugality of founding members was transferred to the stores which maintained a
very simple look in second tier locations.
 A central aspect of Aldi’s model was the ubiquity of private label brands in its stores over
which it exercised rigorous quality control.
 It accepted only cash and debit card as modes of payment.
 It was leader in Germany and gave tough competition in other parts of Europe. It
entered US in 1976 and had established 400 stores by 1993 with sales $1.2 billion.
 Usually Aldi stores were of size 8000-15000 sq. ft. and stocked about 1400 SKU’s.
 Decisions about most in-store decisions were taken centrally thereby keeping restraint
on independence of store manager.
 Most Aldi workforce was cross trained so that a handful of people could run the store if
needed. Shopping at Aldi stores warranted more self-service from customers.
 In 2013, it had 1200 stores operating in 32 states. Aldi was planning aggressive
expansion with 650 new stores by 2018 with target of new 150 stores every year.

Key Issues
 Product assortment was limited to basic need items. Hence, many customers considered
Aldi stores as unattractive due to low ambience and felt it did not stock enough
products
 Despite being in U.S. market for about 40 years it’s awareness was relatively low
 Apart from its online presence, a weekly newsletter was the only other way of
advertisement
 Closing time for Aldi stores is 7:00 pm or 8:00 pm and on Sundays it opens only for 5
hours which makes is un accessible for many potential customers
 Aldi mostly stocks private labels which it owns which deters many customers who prefer
big national brands
 Most Aldi stores did not accept credit cards or personal checks which is a hindrance for
many customers
 Presence only in 32 states out of 50 in U.S.

Key Recommendations
 Aldi should increase the operating hours of the stores to increase the footfall and
ensure larger sales
 Aldi should start accepting credit cards across all stores
 Introduce a range of big stores in metros which will be larger in size and store more
number of SKUs
 Aldi should conduct market research to better understand the consumers of new
store locations to decide which products to have and store format
 Replace some of the private labels with known brands to increase consumer
confidence
 Should choose location of new stores according to the kind of customers to be
served
 Increase the marketing budget to increase the awareness level and consumer
confidence in Aldi stores
 Have in store demonstrations of private labels or comparison with products of
known brands