Aldi Executive Summary

Aldi is a corporation that was created over 50 years ago and became the first discounter in the world. They wanted to put the customer first by providing high quality food, respectful customer service, fast shopping experience, and low prices. They soon realized that in such a cluttered market, they needed to differentiate themselves from other competitors. There are many ways that any company could go about doing this, but Aldi took a very unique approach.Aldi has been very consistent over the years in the way that they operate, but they have always been based on a cost-focused competitive strategy that not only focuses on lowering the costs for products in the market, but provides something extra to really stand out from other markets. Aldi

These exclusive brands allow Aldi to save money within their store operations by saving time and resources when it comes to stocking shelves. Not only does the company save money itself, but Aldi’s customers have been able to get sizable discounts each shopping trip as well. Today, Aldi uses cost-effective strategies by keeping the processes of buying, logistics, and store operations as efficient as possible. They also participate in volume purchasing, which allows them to offer bigger discounts to their customers.The higher the volume that they purchase their products, the cheaper they can get them from the suppliers. This is because the suppliers are more dependent on Aldi’s business, so they offer them incentives to not switch to other suppliers. The three core values of Aldi are simplicity, consistency and responsibility. Lean production ties in closely with these values. For example, Aldi stores are simple in design and all stores are very similar which creates consistency. Lean Production is not only used by Aldi to cut the cost for the business, but also to pass on these savings and top-quality services to their

it is also important to remember that Aldi’s main competitive advantage is its low prices offered to its customers, therefore their customer base will prioritize low discounted prices over any other factor when shopping for groceries. This means that they are highly price sensitive, if the prices were to rise, the demand for Aldi’s products will fall, since a majority of their customers will look for other cheaper alternatives. Therefore, the customer bargaining power is very strong for Aldi. The next force, the threat of substitutes, can go either way for Aldi: on one hand, they can choose to stock their own brand of produce, toiletries, etc. which will therefore limit the threat of substitutes to virtually zero; on the other, if they see an opportunity for increased profit by stocking competitor’s brands, they may do so. Aldi’s brand, in general, is the substitution to big name brands. Since this substitution is sold for less and has the same qualities as big-name brands, they have had great success in sales. Name brands, such as Cheerios and Kleenex will always be a threat to off-brand substitutions but in the end, it is Aldi’s decision, and while there are many brands out there, the threat of substitution is relatively weak as they will more often than not choose to stock their own brand, meaning more exposure, public relations, and keeping the cost of inventory low. The third force in Porter’s model is the