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ALDI PESTEL & SWOT Analysis

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Introduction

Company Overview - ALDI: Aldi Group has been highlighted as a leading grocery chain store with more than 7,500 stores across the globe[1]. The company has its roots in Germany that has remained its strongest market over the years with 40% market share in food retail segment, while aggressive expansion has been undertaken into other European countries and the US[2]. Aldi is a privately held company that operates as Aldi North and Aldi South, with its headquarter in Essen, Germany. PESTEL Analysis: Political: � The accession of some major countries like China to the WTO made it easier for Western food retailing companies to penetrate lucrative markets worldwide[3]. Moreover, the joining of the ten Eastern European and Baltic states to the EU in 2004 similarly facilitated the entry of Western companies into these markets[4]. This suggests that supermarkets would be able to strengthen their supply chains by leveraging upon economies of scale and scope, therefore an increase in supplies is expected in the future. Economical: � The health of economy is a vital influence on the extent of discretionary buying and how much is spent on necessity purchases. The trends in personal disposable income has seen steady rise of 14% in the period of 2002-2006[5]. This growth has been assisted by low unemployment, low inflation and falling interest rates for much of the period. ...read more.

Middle

� As UK economy has been forecasted to grow at a rate of 4.7 % annually[18]. Therefore the retail business in UK is attracting some of the established names from the US and mainland EU markets. Threat of Substitutes: � Threat from substitute is low to medium. � Retail superstores have diversified businesses and therefore the threat of substitutes in the non-food segment is high. This is due to the presence of specialized retailers and service providers in this segment. � In the case of food-retailing that is the core business of superstores, substitution consists of local off license and grocers. But the magnitude of size allows these companies to have a competitive advantage over the small and medium sized players and therefore threat of substitution is low. The Extent of Competitive Rivalry: � The extent of competitive rivalry is high � UK retail supermarket industry is highly competitive due to the presence of major players and names in the market. The main retailers are Tesco, Asda, Sainsbury, Morrison/ Safeway, Waitrose, Somerfield, Co-operative Group and Iceland[19]. Some of the key figures regarding these major players can be represented with the help of following table: |Name |Number of Outlets |Sales � millions |Share of Food Retail Market | |Tesco |1,878 in UK & 2,318 Worldwide |30,814 |35% | |Asda |267 |13,098 |17% | |Sainsbury |727 |14,220 |15.5% | |Morrison/ Safeway |187 |12,116 |13.5% | ...read more.

Conclusion

p. 21 [12] Financial Times (2006) "The boom in organic food sales defies science and sense", MICHAEL SKAPINKER, London (UK): Jan 18, 2006. p. 13 [13] Mail on Sunday (2006), "Online sales boom boosts Sainsbury's", TEENA LYONS, London (UK): Jan 15, 2006. p. 2 [14] Independent (2003), "Supermarket groups bank on pharmacy deregulation as OFT inquiry concludes", Nigel Cope City Editor, London (UK): Nov 21, 2003 [15] Financial Times (2006), "King claims Sainsbury is 'in the zone' with Tesco FOOD & DRUG RETAILERS"; [LONDON 1ST EDITION], ELIZABETH RIGBY, London (UK): Jan 13, 2006. p. 22 [16] National Minimum Wage, (2006), "Low Pay Commission Report - 2005", www.lowpay.gov.uk [17] Daily Record (2006), "Tesco way ahead in store wars"; [Streets Edition] Glasgow (UK): Jan 14, 2006. p. 6 [18] HM Treasury (2007), "Fiscal Policy in UK", www.hm-treasury.gov.uk [19] Mintel (2006), "Retail Intelligence Report - Grocery Multiples", Mintel International Group Limited, April 05 [20] Mintel (2005), "Retail Intelligence Report - Grocery Multiples", Mintel International Group Limited, April 05 ----------------------- Potential Entrants Buyers Substitutes Suppliers The Industry Threat of New Entrants Bargaining Power of Customers Threat of Substitute Products Bargaining Power of Suppliers Rivalry among Existing Firms Porter's Five Forces HIGH VERY LOW MEDIUM / HIGH LOW / MEDIUM HIGH Threats Strengths Opportunities Weaknesses Focused Low Cost Leadership Store Network Price War International Expansion is Expensive International Growth Over Dependance on German Market Inflexibility Aldi: Abridged SWOT Analysis Non-Food Segment Growth Organic Food Range Aggressive Competition Management Style ?? ?? ?? ?? 1 ...read more.

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