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Case Study: Aldi: A Low-Cost Retail Giant's Distinctive Business Practices

Aldi was founded in Germany in the 1940s and has since expanded internationally to become one of Europe's largest retailers. Aldi keeps costs low through a business model based on simplicity and efficiency. It carries a limited range of 700 fast-moving grocery products, does not provide bags, and engages in minimal advertising. Aldi also simplifies operations through strategies like employing fewer staff per store. This low-cost approach has helped Aldi become one of the biggest retailers in Germany and a threat to other major companies.

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120 views

Case Study: Aldi: A Low-Cost Retail Giant's Distinctive Business Practices

Aldi was founded in Germany in the 1940s and has since expanded internationally to become one of Europe's largest retailers. Aldi keeps costs low through a business model based on simplicity and efficiency. It carries a limited range of 700 fast-moving grocery products, does not provide bags, and engages in minimal advertising. Aldi also simplifies operations through strategies like employing fewer staff per store. This low-cost approach has helped Aldi become one of the biggest retailers in Germany and a threat to other major companies.

Uploaded by

mihirshah4590
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CASE STUDY

Aldi: A Low-Cost Retail


Giant’s Distinctive
Business Practices
About ALDI
Aldi was set up by Karl and Theo Albrecht
soon after the second world war.
In 1948 soon after the German currency
reform, the Albrechts incorporated their
business as the Albrecht discounting
company.
At this time company had 13 stores in the
Ruhr area of Germany.
Cont…
By 1955, there were 101 Albrecht
discounting stores in Germany.
By 1960, this number had increased to
300.
In 1961, the first supermarket style store
called “ALDI”(short for Albrecht discount)
was opened in Dortmund, the largest city
in Ruhr area.
Cont…
Aldi embarked on its international
expansion in the late 1960s.
Over the years the company expanded
into the U.S as well as most of the
countries in Europe.
By the late 1990s there were more than
3000 Aldi stores in Germany.
By 2000, Aldi has become one of the
biggest business enterprise in Europe.
Scenario of Retail Industry in
Germany
Metro AG, REWE, Edeka Group, Aldi and
Lidl were biggest retailers in Germany.
All these five retailers were among Top 10
retailers in Europe.
Still German retail sector witnessing slow
growth rate in early 2000s
In early 2000s Germany retail sector was
ailing , accounting for one in every four
business failure in country.
Aldi Way of Working
Aldibusiness model was based on
simplicity and efficiency.
The company motto was
“Top quality at incredibly low pirices-
guaranteed”
Secrets of Aldi’s success
Keep it simple
Strive to earn your customers trust
Set clear goals and follow them rigoursly
Improve details daily
Don’t optimize, maximize
Know where you stand, but don’t waste time on budgets
and figures
Be fair to your suppliers and help them improve their
business.
Practice management by trust and control
Talk in terms that people can understand
No matter how successful you are, stay thrifty and frugal.
Product Strategy..
Aldi’s product strategy was based on
carrying a limited variety of fast moving
products.
Typically Aldi stores carried only 700
different products, compared to 1,50,000
products carried by a Wal-Mart supercenter.
Aldi carried only DRY products or products
that does not require refrigeration to save
the cost.
No Frills set up
Aldi did not provide grocery bags to
customers. Customers either has to bring
their own bags or buy them at store.
The stores were kept simple.
No Advertising
Aldi had a policy of keeping advertising to
a minimum.
They communicate by small weekly news
letter called “ALDI INFORMIERT”.
Simplified Operations
Aldi relied on simplicity to keep its operational
cost low.
On an average, each Aldi employed three
people.
Aldi limited assortment strategy also made
the billing process easier.
Aldi took a lot of care in selecting vendors,
and in developing and maintaining close ties
with them.
Threat to Aldi
By 2005 more than 80% of the Germans
lived within 20 min of an Aldi store..

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