A case study to understand the strategic management flow of an retail store in the US market

1. GROUP-5
Presents
Strategic Management-I

2. T
H
E
T
E
A
M
Ravi Harinandan
MBA06117
Pranoy Yadav
MBA06107
Ishan Mishra
MBA06068
Md. Fahad
MBA06083
Nitin Kumar
MBA06095
Vinay Parihar
MBA06193

3. INTRODUCTION: ALDI
Founded in 1962 with a small grocery store in Germany and expanded the
market to US in 1976.
Offers low price and stresses on private label for products.
Goal to expand 50% of stores (2000) in US by 2018.
Aldi remains unnoticed into the U. S. market even after 40 years of entrance
Challenge to become more marketable to compete with other large stores
like Wal-Mart in the U. S. market.

4. PROBLEM STATEMENT
ALDI
What all initiatives should Aldi tak in order to smoothen it's expansion
process?
Aldi, a grocery and other household items retail European company, is facing tough
times expanding its business in America, facing stiff competition from large players
like Walmart. Even though its revenue is rising steadily, it forms a very small fraction of
the American market. (6.5 billion as compared to 65 billion of leader Walmart)

5. Walmart may lobby for tighter regulations for
non-local companies restricting expansion
POLITICAL
9% compounded annual growth rate from
1970s. Two grocery formats Emerged.
Thrifty, unattractive store. Citizens trusted
National labeled brands.
Slow in adopting technology
ECONOMICAL
SOCIAL
TECHNOLOGICAL
IMPACT OF ALDI ON
U.S. EXPANSION
PEST ANALYSIS AND ITS IMPACT OF ALDI ON U.S.
EXPANSION
Low to Medium
Medium to High,
positive
High, negative
High, negative
ALDI

6. In the grocery sector, it's far the maximum favorable factor that there could be a low hazard of
new entrants because of the large number of barriers in the way of the latest entrants in the
retail industry. It is assumed that this is a very lucrative business and income can be gained by
Aldi. Part of the industry contact that already exists, Aldi stands firm because of the supplier
trust and customer following.
THREAT OF NEW
ENTRANCE
Aldi is an organisation that has more than 10,000 outlets around the world, which helps them
to negotiate the lower cost of the commodity with the vendors. Aldi does not adjust
manufacturers and suppliers or replaces them to whom Aldi deals with over the entire supply
time. From this factor, Aldi and suppliers have a stronger coordination on their company with
regards to the prices they distribute the goods.
As we know, the Aldi has won a large amount of the markets with their approximately $6.5
billion market share, but most discount stores such as Walmart and Target are rapidly seeking
to advance their advantage. Thus, the Aldi has to strengthen their weakness in order to attract
customers.
Aldi is facing a replacement dilemma, but there is a risk that it will increase in the future
because the competition is looking to beat it. Aldi, who's top of the low-cost best buys in the
industry, is maintaining the competitive edge. It is impossible for the competition to provide an
alternative to this kind of low price like Aldi is offering since the prices of Aldi goods are 20 to
30 percent less than the retail costs.
Walmart, Tesco, and Sainsbury are the biggest rivals of Aldi and they can be difficult for Aldi
to face because of their business strategies and marketing tactics, but Aldi is still unaffected
because of the low price feasible and quality product features it provides
BARGAINING
POWER OF
SUPPLIER
BARGAINING
POWER OF BUYERS
THREAT OF
SUBSTITUTE
EXISTING RIVALRY
(COMPETITION)
INDUSTRY ANALYSIS USING PORTER'S 5 FORCE
Low
Low
Low to
Medium
High
High

7. SUGGESTED SOLUTIONS
ALTERNATIVE-1
• Spread awareness of its offerings and
low prices.
• Utilize social media channels like
Facebook, YouTube, or Instagram.
Enhance Brand Awareness
ALTERNATIVE-2
• Avoid direct competition – Consider
locations where Walmart has lesser
presence.
• Location analysis to see the scale of
competition.
Strategic Store Locations

8. • Greater brand awareness
• High promise of an increase in
customer base
• Increased costs against Aldi’s
operating practice
• Difficult to find such locations with
Walmart expanding aggressively
• Aldi would be the best choice for
shoppers in the area
• Reduced threat of losing customers
to competitors
Strategic Store Locations
Enhance Brand Recognition
PROS
CONS
SOLUTION ANALYSIS

9. We would recommend enhancing brand awareness through
advertising as an alternative that Aldi should focus on. Since Aldi’s has
been relatively unknown for decades, it is an excellent opportunity to
help Aldi attract new customers. This strategy is bound to improve
Aldi’s recall value and its customer loyalty. The second alternative
would be great for the short run, but is not feasible for the long run.
Finding such locations would be a futile task if Walmart decides to
open its stores near Aldi’s in the future. So we recommend that Aldi
makes its consumers aware of its presence and its benefits over the
competitors. Consequently, Aldi’s would be able to successfully
expand stores and run store sustainability if they could improve their
competitive disadvantages to competitive advantages.
RECOMMENDATION & CONCLUSION
VS

10. Thank you!