Abstract

Aldi was one of the pioneers of the hard discount style of retailing in Germany. The Aldi Group (which comprised of two companies - Aldi Nord and Aldi Sud), was known for its low prices and no-frills business model. The case describes the various elements of Aldi's business model, and how they allowed the company to adhere to its low price philosophy. It also talks about Aldi's international expansion, and discusses some of the changes Aldi had to adopt in its overseas markets. The case concludes with a discussion of Aldi's future prospects in light of the saturating German market and intensifying competition from Lidl, as well as the possible effect of the trend in the international retail sector of investing heavily in improving in-store experience on Aldi's no-frills philosophy.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study the low cost business practices of a well known discount retailer in Germany
• Analyze how the various elements of the business model allowed the company to adhere to its low price philosophy
• Study the international expansion strategies of the company and to discuss whether or not the company was right in adhering to its low cost model in overseas markets
• Analyze the future prospects of the company in light of issues like saturation in the home market, intensifying competition, and emerging trends in the international retail environment.

Keywords

Aldi, Albrecht, Hard discounter, Low cost business model, Limited assortment, Private label products, Weekly Special Buys, Cross docking, Cost control, Lidl, Wal-Mart, German retail industry, Market saturation