Market entry strategy of Aldi and Lidl. Plans for expansion.

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Aldi and Lidl 


In our globalized world it Is becoming more and more challenging for companies to create their own unique brand. Competition is high and companies have to decide which strategy is the best for their business evolvement. This report is focused on two different companies Lidl and Aldi operating in the food retailing industry. Lidl and Aldi mostly was entering markets through Greenfield investments. These two companies chose greenfield investment as they wanted to have a full control over their business, promote their own brand and manage their business on their own.  Advantages and disadvantages of entering market through greenfield investment is included in this report. Aldi’s main objective, when entering other market like UK and Switzerland, is ‘recognising customers needs and meeting the requirements of the demand in that country’. Lidl and Aldi have completely different strategies in global expansion. Aldi  was entering big markets like the USA and Australia and this was good strategy for company’s expansion as target markets of such countries are much bigger than European target market. But it takes much more effort to control such big markets. As for Lidl’s future I would recommend to expand in other European countries before entering big markets like Russia, although it would be a great opportunity for Lidl to enter Russian market.

About Aldi and Lidl

Both companies Aldi and Lidl were founded in Germany.  Aldi was founded in 1946 by two Albrecht brothers and Lidl was founded eleven years after Aldi was founded by Dieter Schwarz. These two companies were opening and still open, grocery discount stores which means selling products at the lowest price possible reducing its costs on companies promotion, rental fees or purchasing prices of properties as well as having a basic outlet format stores.

German company Aldi started to go global after Second World War, time characterised by common market in European countries, which means it was time when trade barriers were reduced and  goods and production factors ( labour, capital, technology) could freely move from country to country. As this company was already big enough to invest in other country it firstly invested in Austria, country which borders  on Germany. Austria was mostly influenced by Germany culture, so it was a good idea for the company’s first experience in investing abroad as the culture differences were not so big.  

The same as Aldi, Lidl company focuses on discount markets, larger supermarkets and cash and carry wholesale markets.  At first, Lidl copied Aldi as much as possible, although in time Lidl took completely different strategy and added more articles to their assortment and new innovative approaches.  

1.a Market entry strategy of Aldi and Lidl

FDI (foreign direct investment)is an equity mode for companies which want to export their products or services. Aldi and Lidl decided to invest abroad to expand their business and some of the benefits of doing so are : cheaper labour costs,  infrastructure quality , economic growth or market size of the host country. Aldi and Lidl are both ‘grocery discounters’ and to save money these companies build up their stores in suburban areas and remote districts where they can save money on rent or on purchase prices of properties and being a ‘grocery discounter’ Is a good strategy to expand their business abroad. Economic and political environment in the home country is influential on company’s decision to go international. Power and prestige is another influence on Aldi’s and Lidl decision going global. The  companies want to become successful, popular and powerful. They want to become an example for the rest of the world and gain global market power. That is why Aldi and Lidl decided to go global.

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Aldi and Lidl were mostly entering other countries markets through Greenfield investment. Greenfield investment  is a form of  foreign direct investment which means setting up an entirely new foreign facility in the host country. These two companies wanted to keep their brand all over the world and have full control over their business.

Although Greenfield investment is not always the best way to enter  the foreign market. Although in Aldi’s and Lidl’s case it was the best way to enter the foreign market, as the primarily aim for these two companies was to promote their own brand and to ...

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