Aldi Inc. - Optimizing Profits in Economic Recession
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Case Details:
Case Code : BSTR348
Case Length : 11 Pages
Period : 2007-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Aldi Inc.
Industry : Retail
Countries : US, Germany
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Please note:
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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Excerpts
Background Note
The Aldi Group was set up by Karl and Theo Albrecht (Karl and Theo), sons of a miner who lived in Schonebeck, in Germany. When the Albrecht siblings were children, their father contracted a lung disease and had to quit the mining job. He started working in a bakery while their mother opened a small grocery store...
Store and Merchandise Management
Aldi entered the US in 1976. It opened its first store in southeastern Iowa. The company's business model was based on providing top quality products at low prices. The discount retailer emphasized keeping its cost low in all aspects so that it could offer the lowest prices to its consumers. The philosophy of the company was,
"Incredible Value Every day"...
Tackling Recession
Retail experts opined that though the main competitor for Aldi in the US was Wal-Mart, the prices at Wal-Mart were not as low as those at Aldi.
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According to Aldi, consumers could save an average of 16 percent to 24 percent at its stores as compared to the big box or discount stores and 30 percent to 40 percent on private label or store brands as compared to branded products available at traditional supermarkets...
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The Road Ahead
In 2010, Aldi planned to enter the Texas market and open 30 new stores there. Commenting on the untapped US retail market, Queck said,
"In the US, Aldi has just 1,000 stores spread over 29 states, so that leaves a lot of room for further expansion." Some analysts were concerned about whether Aldi would be able to sustain its growth momentum in the US once the recession was over...
Exhibits
Exhibit I: Logos of Aldi
Exhibit II: An Aldi Store in the US
Exhibit III: Grocery Selections at Aldi in the US
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