Aldi: The European Hard Discounter's Strategy in Australia

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Case Details:

Case Code : BSTR296
Case Length : 15 Pages
Period : 2001-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : Aldi
Industry : Retail
Countries : Australia

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

According to the report, Aldi's presence had had a positive impact in the neighborhood where it operated, "Aldi creates a strong competitive dynamic on the products it stocks and puts pressure on Coles and Woolworths to offer many of their private label products at prices not seen before Aldi's entry."7

Aldi, one of the largest retailers in Germany, entered Australia in 2001.

Its stated goal was "to provide our customers with the products they buy regularly and ensure that those products are of the highest possible quality at guaranteed low prices."8

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Aldi was among the oldest retailers in Germany, and was considered to be one of the pioneers of the hard discounter concept - a format characterized by a high turnover on a narrow range of grocery items in a small space (Refer to Exhibit I for features of a Hard Discounter).

Aldi with its 'no-frills' style of retailing maintained low prices through its low cost business model that eliminated all unnecessary expenses and passed on the savings to the customers. One of the biggest advantages of maintaining a simple operational set-up was that Aldi was able to keep its wage bill low by employing the minimum number of people. The company's motto was 'Top quality at incredibly low prices - guaranteed'.

Aldi used the same business model along with a bit of localization in Australia and this helped it become popular with a section of the consumers and also to expand rapidly in Australia...

Excerpts >>

7] "Report of the ACCC Inquiry into the Competitiveness of Retail Prices for Standard Groceries," Australian Competition and Consumer Commission,, August 5, 2008.
8] "Aldi Australia,"

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