SWOT analysis of Aldi – Aldi SWOT analysis
This is a detailed SWOT analysis of Aldi. It examines the strengths and the weaknesses of Aldi. It also examines the opportunities the company should explore and the threats it should keep an eye on. Aldi is a German supermarket, headquartered in Essen, Germany.
Strengths of Aldi
Aldi is a leading discount supermarket chain. It has operations in many European countries, China, and the USA. It was founded in Germany in 1946 by two brothers Karl and Theo Albrecht. It opened its first store in the UK in 1990 and currently has over 840 stores in the country (Simpson, 2019). There are over 4100 Aldi stores in Germany, and over 7600 worldwide.
Aldi has more than 31,000 colleagues in the UK and Ireland (Aldi Stores Limited, 2020). As of December 2019, it is No. 5 retailer in the UK with 7.8% market share (Kantar, 2020). It has won a number of accolades over the years. For instance, it won the Which? Best Supermarket title for a record fourth time in 2015 (Aldi Stores Limited, 2020). It has also won Supermarket of the Year at the Mother & Baby Awards 2017, and Drinks retailer of the Year 2019. These are some of the many awards the company has picked up over the years.
Aldi is a discounter. It sells a very good number of its own private label brands. Aldi is so confident with quality of its products that it offers customers Double Guarantee. If customers are not 100% satisfied with any of its products, Aldi promises to replace the product and refund the customer’s money. However, it is worth noting that Double Guarantee does not apply to all products (Aldi Stores Limited, 2020).
Weaknesses of Aldi
Aldi faces positioning problems. For instance, many customers see it as a store for cheap and low-quality products. This is a problem for Aldi. The company needs more PR and advertising campaigns designed to change customers’ perception.
Interior ambiance of Aldi stores is not that great. Aldi does also have a limited number of members of staff in each store to deal with an increased customer footfall. This does not give many customers a great shopping experience as many customers occasionally need assistance in product search.
Aldi’s reputation faced challenges over the years because of a number of scandals. For instance, it was caught in horsemeat scandal in 2012. Aldi confirmed its withdrawn beef products contained up to 100% horsemeat (The Guardian, 2013). However, the company blamed its supplier Comigel for the scandal.
Aldi was also accused of spying on its employees in German stores. The German magazine Der Spiegel reported that an extensive surveillance operation with cameras and detectives was conducted by Aldi to snoop on its employees to find people who were working slow and some of their very personal information. However, Aldi denied the allegation.
Opportunities for Aldi
Aldi should move into emerging economies e.g. India and Brazil where the populations are massive and people can in fact afford Aldi products comfortably. Exploring other emerging economies is worth the effort as well. Aldi also sees great growth opportunities in the USA. The company has announced to invest $3.4 billion to expand the number of its U.S. stores to 2500 by 2022 (Fortune, 2019). It currently has 1,900 stores across 36 states in the country (Aldi Stores Limited, 2020).
Further growth in the UK is also a great opportunity. In fact, Aldi has an ambitious plan for this market. The company currently has over 840 stores in the UK; however, it may in fact have over 1300 stores by 2022. It is worth noting that the initial plan was to have around 1000 stores by 2022. Aldi has recently focused heavily on increasing its presence in London, the capital of the UK.
Threats to Aldi
Threat is the last element to address in the SWOT analysis of Aldi. Aldi faces stiff competition from a number of big competitors. Carrefour, Walmart, Tesco, and Lidl are some of the biggest competitors in Aldi’s global markets. Lidl is the biggest threat to Aldi both in its German and the UK markets. In the UK, it is behind Tesco, Asda, Sainsbury’s and Morrison’s, but above Co-op, Lidl, and Waitrose.
There are certain challenges facing the global economy. In the USA, there is a growing trend of isolationism and inwardness, while Brexit uncertainty is shaking the EU. These are real challenges for any retailer, and Aldi is not an exception in this regard.
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Last update: 07 January 2020
Aldi Stores Limited (2017) Award-Winning Aldi Quality, available at https://www.aldi.co.uk/awards (Accessed 27 December 2017)
Fortune (2017) German Grocery Chain Aldi to Invest $3.4 Billion to Expand U.S. Stores, available at http://fortune.com/2017/06/12/german-grocery-chain-aldi-expand-stores/ (Accessed 22 December 2017)
Kantar (2020) Grocery market share, available at: https://www.kantarworldpanel.com/en/grocery-market-share/great-britain (accessed 07 January 2020)
Simpson, E. (2019) Aldi plans to open a new supermarket each week, available at: https://www.bbc.co.uk/news/business-49692086 (accessed 07 January 2020)
The Guardian (2013) Aldi confirms up to 100% horsemeat in beef products, https://www.theguardian.com/business/2013/feb/09/aldi-100-percent-horsemeat-beef-products (Accessed 22 December 2017)
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Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.