International Marketing
ALDI Australia

In 1948, the brothers Theo and Karl Albrecht opened the grocery store ‘Albrecht Discounts’ (ALDI) in
Essen (Ruhr Valley), Germany. According to Bonn (2007; pp. C60); “
the store had a simple layout and
offered a restricted number of products at a low price. The company grew rapidly, owning 13 stores
in 1950 and about 300 stores in 1961 across Germany
”
(Bonn, 2007)
. By the end of 2003, ALDI had
become one of the world’s biggest global food retailers.
“In 2004, ALDI owned 44 stores in New
South Wales, 20 stores in Victoria and eight stores in Queensland. With these stores, ALDI captured
almost 5 per cent of total packaged grocery expenditure in Ne
w South Wales, 2.5 per cent in Victoria
and 1.4 per cent in Queensland”
(Bonn, 2007, pp. C60).
ALDI group has developed a very successful Australian operation. During a Federal Government
enquiry in 2008 into the level of supermarket competition in Austra
lia’s grocery industry, the
Australian Competition and Consumer Commission found that ALDI had added significantly to
competition
(
Carey, 2012
,
2013a
,
2013b
)
. A 2009 survey by Australia’s peak consumer group,
CHOICE, found that
ALDI was quite cheaper on comparable groceries than Woolworths and Coles
(
Carey, 2012
)
. ALDI has been well received by the Australian public, and many consumers in Western
Australia, Tasmania and the Northern Territory are hoping that ALDI will expand there (Carey, 2012
;
2013b).
“ALDI sources 100 per cent of fresh meat and 94 per cent of chilled dairy and 97 per cent of fruit and
vegetables within Australia. We are the only major grocery retailer in Australia to list all products
and prices online so our customers know
the exact value they are getting”
(Carey, 2012, pp.1).
ALDI’s in
–
store lay out
ALDI specializes in staple items, such as food, beverages, toilet paper, sanitary articles, and other
inexpensive household items (Carey, 2013a). Many of its products are own brands, with the number
of other brands usually limited to a maximum of two for a
given item. This increases sales for each
article, and allows ALDI shops to be smaller than those which have more brand choice (Bonn, 2007).
This practice allowed ALDI to avoid using price tags even before the introduction of bar code
scanners. In additio
n to its standard assortment, ALDI has weekly special offers, some of them on
more expensive products such as electronics, tools, appliances, or computers, usually from Medion
(the main manufacturer of electronics for ALDI) (Carey, 2012). Discount items ca
n include clothing,
toys, flowers, and gifts. Specials have strict limits on quantities, and are for one week.
Challenges to ALDI’s growth in Australia
In general, the main challenges new entrants such as ALDI face are as follows;
?
The high Dollar
–
as h
as been the case with almost every segment of manufacturing
–
the
increasing value of the Australian Dollar compared to other currencies, has presented
problems with making Australian
–
made produce and food items more expensive than their
imported counterpa
rt. This make the sourcing of locally
–
made produce from Australian
independent growers (this is the primary strategy of ALDI to drive down the prices of its
products) more expensive (Carey, 2012). This puts a downward push on the profitability of
ALDI and
perpetuates the business model that is currently being used by the large
mainstream supermarkets in Australia resulting in further crowding out effect of the small
independent producers.
?
Supermarket private labels
–
refer to range of products and services that are produced by
the supermarkets’ own production line. Often referred to as Home Brands, the private labels
were introduced in the market 30 years ago. It has been claimed that, private labels are
getting in
the way of Australian products getting to consumers, robbing Australian makers of
shelf space, being increasingly produced offshore, and forcing them to whittle their margins
away to compete on price (Carey, 2012).
?
Use of Information Systems (internet)
and the virtual supermarkets
–
Information Systems
(IS) is increasingly being used as a tool by the suppliers and supermarket giants to coordinate
the supply chains, quantity and quality of the materials ordered and delivered and monitor
the contractual ob
ligations of the partners
(
Apostolou, 2011
)
. In Australi
a, Woolworth has
been at the forefront of moving towards a “Virtual Supermarket”
(
Woolworth, 2012
)
.
“In
early
2012, at the Flinders Street outlet of Woolworth a wall was added that featured more
that 120 of Woolworths’ most popular products across all product categories, including the
supermarket’s famous fresh food”
(Woolworth, 2012, p.1).
The use of the virtual
supermarket has surpassed the use of the Internet as a tool to simply check for products and
special items on sale
(Apostolou, 2011).
The virtual supermarket (in the case of
Woolworths) has been developed further to include a platform for transaction and delivery
in addition to the usual use of the system as a tool to provide information about range of
products and the latest special of
fers
(Apostolou, 2011).
Your Written Case Study Assignment should address all the questions below
.
the total number of words for this assignment is 1000 to 1500 words
Due Date
Sunday
21 April 2013
ALDI wishes to grow further into the Australian market and gain a larger share of the market. What
approach do you recommend for ALDI to employ to maintain
its level of growth and strategic
competitiveness in light of challenges that the sector is facing (some of which have been explained in
the case notes)?
Use theoretical models and concepts covered in the subject material including Chapters 1
–
4 (Hanson
et
al, 2011) to answer this general question, basing your discussion on the questions below:
(a)
What is strategic management and strategic competitiveness? How have the
characteristics of the competitive landscape influenced the strategic competitiveness of
fi
rms? Discuss these, and the effect they may have had on ALDI. The answer to this
section needs not to exceed a paragraph (You can use this section as the introduction to
your assignment).
(b)
What role does the external environment (EE) have on ALDI’s perform
ance, and which
elements of the EE have had a critical influence on ALDI’s strategic intent and
implementation? (You need to refer to the Porter’s 5 forces Model to describe and
explain the EE influencing factors).
(c)
What role does the internal environment
(IE) have on ALDI’s performance, and which
elements of the IE have had a critical influence on ALDI’s strategic intent and
implementation? (You need to refer to Value Chain Analysis to describe and explain the
IE influencing factors).

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