SWOT Analysis of ALDI 2020


Name Aldi
Industry Retail
Founded 1961
Headquarters Essen, Germany (Aldi Nord) Mülheim, Germany (Aldi Süd)
CEO Marc Heußinger
Revenue €53 billion (2020)
CompetitorsLidl, Walmart, Tesco, Kaufland, Kroger, Safeway, Costco, Giant Eagle, Ocado, and Sainsbury’s

Company Overview

Aldi is a global retailer headquartered in Germany. The company was founded in 1961 by two brothers, Theo and Karl Albrecht. They took over their mother store in 1946 which was split into two different legal forms in 1960, Aldi Nord and Aldi Sud.

Although they are now often referred to as one enterprise, the two companies have been separate entities since 1966; for the purposes of this analysis, the two companies will be treated as a single enterprise. Becoming the first discounter in the world, Aldi now has more than 10,000 stores around the world. Their main focus is on selling low-price foods and drinks, but also provide different domestic goods, cosmetic products, and home items (Aldi, 2020). 

ALDI Strengths 2020:

  • Brand reputation is one of the key intangible assets.

    Aldi (2020) states that they employed more than 33,000 colleagues in the United Kingdom and Ireland. Furthermore, Kantar (2020) shows that it is now the fifth retailer in the UK owning 8% of the market share. They received numerous accolades over the year, some of the most recent ones being the title of Best Grocer 2019, Great Taste 2019, and Best Value for Money Supermarket 2019. 

  • Reliable distribution network and long-lasting supplier relationships.

    Over the long years in this industry, Aldi managed to build reliable relationships with its external stakeholders. The strong base of suppliers ensures that there are no supply chain bottlenecks that can shake consumer expectations, while the trustworthy distribution network guarantees that the retailer successfully reaches its target markets.

     
  • Diversified product portfolio.

    Apart from food and drinks, Aldi also sells other discounted products, ensuring that their customers have a wide choice, while the company enjoys a stable stream of revenues. 

  • Successful international business strategy.

    Aldi has a history of successfully penetrating new markets, helping them to diversify their revenue streams by sharing the economic risks amongst the USA, Europe, and China. Simpson (2019) mentions that they have more than 840 stores in the UK, planning to reach 1,200 by 2025.

     
  • Revenue growth and investments despite the pandemic.

    Despite the current pandemic, Aldi managed to retain its supremacy and stability. Kollewe and Butler (2020) state that they are planning to create 4,000 more jobs and open 100 new stores, along with a new online ordering service in the UK, an investment valued at £1.3bn.

    Despite the unfavorable economic conditions created by the Coronavirus pandemic, Lidl’s revenues increased by a minimum of 10% since the beginning of the year, compared to 8% in 2019 (Kollewe and Butler, 2020). 

ALDI Weaknesses 2020:

  • Low market share.

    Despite its impressive growth during 2020, Aldi is still behind the big four British supermarkets when it comes to market share. Kantar (2020) shows that Tesco has a 26.9% market share, followed by Sainsbury’s (14.9%), Asda (14.4%), and Morrison’s (10.1%). 

  • Low focus on customer satisfaction.

    Compared to its competitors, Aldi has limited staff in each store which is available to deal with customer requests. This can decrease the shopping experience significantly, while employees often need to work longer hours. 

ALDI Opportunities 2020:

  • The positive impact of COVID-19 on revenues.

    Considering the current consumer uncertainty because of the pandemic, Aldi’s revenues are likely to grow constantly in the long-term as the global demand for food increases dramatically. This is particularly relevant because the financial uncertainties exhibited by most customers as a result of the pandemic will help boost Aldi’s sales due to its value proposition and low-cost offerings, as Prnewswire (2020) highlights. 

  • Expansion to emerging economies.

    With a strong revenue stream, there is an opportunity to expand to emerging economies, such as Brazil and India. The company has already recognized the market opportunities in the US, as they announced a $3.4 billion investment to expand the number of stores across the US by 2022 (Fortune, 2019). Large economies could benefit from the low-cost business strategy employed by the company, while the management could take advantage of the local low labor costs and other overheads. 

  • Further UK expansion.

    Aldi already plans to expand its coverage in the UK, reaching 1,200 stores by 2025, compared to the current 840 (The Sun, 2020). They focused extensively on expanding in the capital. A major opportunity is to follow the model employed by Tesco and open more stores on the high street. This can boost Aldi’s visibility and brand awareness among customers. 

ALDI Threats 2020:

  • Fierce competition.

    The retail industry across the globe is characterized by fierce competition. Aldi’s global presence is mostly threatened by Tesco, Asda, Walmart, Carrefour, and Lidl, the last one being the major competitor in both the UK and German markets. 

  • The global economy faces numerous challenges.

    Apart from the unpredictable long-term effects of the pandemic, Europe is shaken by the consequences of Brexit. These major changes, correlated with the increasing demands of the customers represent a threat not only to Aldi but also to any other retailer. 

  • New technology can disrupt the industry.

    Any market disruptor or innovator threatens to change the current dynamics of the retailing industry. For instance, the focus on home deliveries, online ordering, and others can lead to major threats to revenue stability and shifting customer preferences. 

SWOT Analysis of ALDI Conclusion 2020:

  • One of the main strengths of Aldi’s is its increasing revenue amidst the pandemic. One might be skeptical regarding the long-term market expectations, but the company decided to make major investments, thus the risks are also higher. One main advantage is that the new stores can increase brand visibility and awareness, helping to minimize the threat posed by competition. In addition to this, creating new jobs will help to offset some of the current economic problems by increasing the employment rate. 
  • Additionally, product variety, following the changing customer trends, and appealing to the millennial generation are already aspects considered by Aldi’s competitors, so it is important to increase their ability to reach the relevant markets. The stability of the global economy remains questionable, but Aldi’s investments across different countries would eventually spread the risks across different economies. 
    You can find a SWOT PDF template here


References

Aldi (2020). Our Amazing rewards.  

Kantar (2020). Grocery Market Share – Kantar Worldpanel.

Kollewe, J. and Butler, S. (2020). Aldi to create 4,000 more UK jobs as sales surge in Covid crisis. The Guardian.

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