ALDI Final Project

Presented by: Morgan Coker, Allie Todd, Kendall Ragatz,

Hannah Farhadi, Wade Allen and Mark Bauer

Contents1. History and international expansion

2. Product offering in Germany

3. Marketing strategy in Germany and outlook

4. Alignment with international strategy

5. Pitfalls in international expansion process

6. Recommendations

7. Suggestion for further expansion

History & International Expansion

a. History

i. Origin: bakery and grocery store (1913)

1. Karl Albrecht in Essen (West Germany)

ii. 1945: sons Karl and Theo assume control

1. foundation of ‘Albrecht Diskont’ (Aldi)

iii. Steady expansion (100 stores by 1955)

iv. 1961: Split into Aldi Süd and Aldi Nord

v. First discount store opened in 1962

vi. Today: about 10,000 stores in 18 markets

1. annual revenues forecast: €76bn in 2016; 250,000 employees

History & International Expansion (Continued)

b. International expansion

i. 1967: acquisition of Hofer KG in Austria (Name used in AUT and SLO

today)

ii. 1976: Aldi Süd forays into USA (first store opened in Iowa), Aldi Nord

acquires Trader Joe’s in 1979

iii. Operations in 16 European countries, Australia and USA

- Over 4,250 Aldi stores in Germany alone (2,400 Aldi North; 1,850 Aldi South)

- By comparison: Only 1,100 Publixes and around 1,000 Krogers in Georgia

General Information

Products and Services Offered in Home Country

- based on simplicity & efficiency

- offer customers a convenient, austere retail

outlet

- everyday items at low prices

- improve cost efficiency for the company

- I.e. charging customers for shopping

bags

- or demanding a deposit for shopping

carts

Products and Services in Home Country (Continued):Payment options Aldi accepts:

Not convenient for customers:

- Until 2004: only cash accepted

- Only accept domestic debit cards, &

Girocard Debit Cards

- Very recent introduction of

credit card or NFC payments

- marred by technical glitches.

Products and Services in Home Country (Continued)Products Aldi Offers:

- Staple Items

- Food, beverages, paper products, sanitary articles, etc

- Mostly own-brand (Grandesse and Fit & Active)

- Commodity inexpensive

- Limited Choices: Smaller Stores & Faster Turn Over

- Recently began offering Red Bull, Coca Cola and Haribo

brands also

- Aldi is the biggest Wine Retailer in Germany

Products and Services in Home Country (Continued):- They also offer a variety of online

services to keep their customers

informed including an Aldi

Newsletter and an Aldi App

- Aldi also branched out to non

grocery parts of business: - Special offering clothing by

Jette Joop

- Aldi Traveling Service

- Aldi Photo Service

- Aldi Flower Service

- Aldi Talk

- Aldi Music

Products and Services in Home Country (continued):On top of all of this, Aldi offers special weekly discounts especially on expensive

products, such as electronics. Aldi’s early computer discounts started in

Germany, where they would sell out of the product in a matter of hours.

- Aldi is known for their low prices, and one main thing they do to keep their prices low is minimal advertisement

- Aldi Germany’s target market is the efficient shopper

- Shopping carts are paid for then the change is returned

- Bring your own bags to reduce costs

- Aldi mimics other brands to reduce costs, but can end up being a better product

Marketing Strategy

ALDI Commercial Example:

- Clearly similar products

- Same quality of not better

- Cheaper

Email Marketing/ Newsletter- Aldi’s main way to advertise to customers

- Emailing is a minimal to no cost

- Informs on the deals twice a week

- Limited time availability increases constant store

visits

- Flows with the time of year and holidays

- Never repeats or recycles throughout the year

Products & Services in the International Market

- ALDI split into ALDI North and

ALDI South

- In the U.S.:

- ALDI North: Trader Joe’s

- ALDI South: ALDI

Products in the International Market: ALDI- South Germany

- National Brand Equivalent (NBE) products

- Emulates well-known, established

American brands

- Exclusive to ALDI

- I.e. Frosted Flakes

- Small selection

- Quicker shopping experience

- Products are taste-tested in the ALDI Test

Kitchen before being put on the market

Products in the International Market: ALDIProduct Categories:

- Food: fresh meats/produce

and wine/beer

- Also includes:

- health products

- automotive parts

- Furniture

- home décor

- gardening tools

- sports/outdoor products

Services in the International Market: ALDIIn-store services:

- Less service-oriented- Everything is prepackaged & self-

service

- Bring your own bags/purchase bags

- Shopping cart rental - Low staff - No sales

Out of store services: - Mobile app- Double Back Guarantee- Online recipes & cooking tips- Warranties

Products & Services in the International Market: Trader Joe’s

North Germany

Products:

- Compared to Aldi:- Less products- More in-store customer service

- Own private label- More of a health focus

- No sales

Services:

- Events/contests- Online recipes & in-store taste samples

International MarketingInternational Marketing Strategy

- Grow market share by providing low prices without sacrificing quality

International Target Market

- Low income earners and people with limited/fixed incomes

Consumer Behavior Trends

- Care more about quality and price than brand name products

- Environmentally conscious- Not overly concerned with customer service

while shopping

International Alignment

Limited marketing efforts globally

->Focus on cost-efficient operations

and lower prices

Potential PitfallsDiffering expectations with regards to shopping experience (service level, store

design and layout, branded products) (s. Walmart’s failure in Germany)

Difficulty for company unknown abroad to obtain a foothold without extensive

marketing efforts (salient in food business, customers tend to stick to

preferred/ingrained choices)

Potential Expansion: Canada (I)Country facts:

Population: 35.1 mio. (July 2015

estimate)

GDP: $1.628tn in 2015

GDP per capita: estm. 45,900$

at PPP in 2015

Potential Expansion: Canada (II)Groceries facts:Grocery sales: C$113bn in 2015

Discounters’ market share: 13.3% (September 2015) (US: 6.1%)

Dominance of supermarkets & hypermarkets (>70%)

Online grocery sales negligible (1.3%)

Potential Expansion: Canada (III)Potential:

71% of Canadian households reported having switched to cheaper brands as of Feb. 2016 due to rising

food prices

59% consider price to be an important factor in choosing

=>possibility of ‘UK scenario’ (rapid expansion of discounters’ market share)

Great cultural similarity with US (https://geert-hofstede.com/canada.html; http://www.mannaz.com/wp-

content/uploads/2012/01/the-cage.pdf)

! Target’s costly pullout from Canada

Potential Expansion: Canada (IV)

Suggested entry strategy:

Identical with pursued before (never

deviated)

(Slow, initial focus on urban areas)

Questions?