Aldi history and development

Company analysis –2130480

 Aldi history and development

Aldi started out in 1948 when two German brothers Karl and Theo Albrecht took over from their mother’s Essen grocery store where they began selling basic items at low prices. The economy in Europe was bad then and only few customers had money to spend but there were very few essential products available. These two bothers had the plans to expand the limited range of products they had once there was an improvement in the economy. As the economy of Germany recovered the Albrecht’s realized that they could maintain lower prices compared to their competitors if only they limited their own product selection down to the basics. They chose to focus on low prices and efficient operations and by 1958 the Albrecht’s owned and operated 300 outlets all over Germany and had revenues exceeding 100 million Deutsche marks.

Aldi growth and expansion

Aldi ended up expanding their operations internationally. It was in the late 1960’s when Aldi stores expanded to Austria and by mid-1970 these stores were in operation in Denmark, Belgium and even the Netherlands. Aldi made a huge impact in these first foreign forays and during early 1990’s Aldi held a 5% market share in Netherlands and realized an estimated $1 billion from sales in 260 stores in Belgium by 1992. By 2000, Aldi was a leader among German grocers with 40% of the market share and even inspired its rival Lidl that was owned by Germany Schwarz Unternhmens Treuhand that ended up copying the aspects of Aldi’s operating model.Having captured almost 90% of the shoppers in Germany, Aldi turned to other markets in order for it to grow further (Lane, 2014).

Aldi’s entry into the United Kingdomhad to overcomenumerous challenges that it had not expected. First of all the U.K consumers had a strong brand loyalty. This brand loyalty among these consumers made Aldi make some changes in its strategy which included a reduction of heavy reliance on private label goods and it began stocking some international brands. Secondly there were a lot of competitors within the local discount chain such as Kwik save. The CEO of kwik save pledged to ensure they match up the prices that Aldi was offering and also buy 100 of the existing retail stores in order to limit  any expansion by Aldi.Aldi responded in 1991 with an agreement whereby they opened outlets at the existing gateway footmark sites with the hope that their low prices would appeal to new customers to gateway that offered better selection as compared to Aldi.

Within the first five years of Aldi in the U.K it opened 100 stores and it preserved to open new stores at a compound average rate of between 36% between 1990 and 1999.Aldi opened its first store within the United States in rural Midwest in 1976. Aldi operated about 150 stores in states of Indiana, Illinois, Missouri, and Kansas. Its estimated sales in the U.S by 1989 reached the half a billion dollar range. This led to an increase in the pace of Aldi’s U.S expansion with new stores being added both in the Midwest as well as the East coast ((Lane, 2014).

Aldi internal SWOT analysis

There are several strengths of Aldi that has enabled it to maintain a competitive advantage. Right from when it was founded Aldi has focused on low prices. In fact it is termed as the world’s lowest cost grocery retailer.Aldi’s prices are termed as delightfully as well as breathtakingly low. Aldi offers powerful price points for all its products in their stores. Their products are generally affordable as compared to those sold by their competitors.

Secondly Aldi has Simplicity and cost efficiency when it comes to their operations. This makes it possible for them to maintain low operating costs which trickle down to their customers through affordable prices on their products. Aldi  relies on Private label sourcing whereby they operate by a model of ubiquity of private label brands within their stores. They exercise rigorous quality control over these private label items with a daily sampling and lab tests and at the same time comparing with items that are well branded.

Aldi also ahs a strong presence not only in Germany but also  all over the world. Aldi boasts of having captured about 90% of the German shoppers. Aldi has about 2500 all over Germany 250o and over 8000 stores in Europe and other countries.Aldi has a strong organizational culture based on cultural rules and values that reflect on the organization’s philosophy. It is well known that the purpose of the organization is to avoid any unnecessary costs and the managers of the company as well as the staff are all cost conscious ; they attach the importance of each of the economic benefits because the organization has a policy of not wasting. A simple rule in the organization is that employees turnoff lights when they can get enough sunlight from outside. This means that the concept of saving costs extends to all areas of Aldi stores which include developing n.............