Aldi: The Dark Horse Discounter

Facts of the case

Aldi was originated in Germany in 1948 and since then it has followed a low-cost model by keeping a
few number of SKUs as compared to other low-cost retail players. The frugality of founding members
was transferred to the stores which maintained a very simple look. 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 e handful of people can 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 is planning aggressive expansion with 650 new
stores by 2018 with target of new 150 stores every year.

Dilemmas
 Many customers consider Aldi stores as unattractive and feel it does 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.

Possible Solutions
 Introduce a range of big stores in metros which will be larger in size and store more number
of SKUs
 Increase the marketing budget to increase the awareness level and consumer confidence in
Aldi stores
 Aldi should increase the operating hours of the stores
 Aldi should start accepting credit cards
 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
 Have in store demonstrations of private labels or comparison with products of known brands
 Aldi should conduct market research to better understand the consumers of new store
locations to decide which products to have and store format