SWOT analysis of Aldi (Aldi SWOT)
This is a comprehensive SWOT analysis of Aldi. It examines the strengths and the weaknesses of Aldi. It also examines the opportunities that the company should explore and the threats that 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 by two brothers Karl and Theo Albrecht. It is the 5th largest supermarket chain in the UK with 9.0% market share (Kantar, 2022).
Aldi has more than 33,000 colleagues in the UK and Ireland (Aldi Stores Limited, 2022). It was crowned WHICH? cheapest supermarket for 2021, and Good Housekeeping readers named it the Favourite Supermarket 2021 (Aldi Stores Limited, 2022). These awards demonstrate that Aldi is ahead of many of its competitors in the fierce battle for corporate and public recognition.
Aldi is a discounter. It sells a good number of its own private label brands. It 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, 2022).
Many Aldi stores in the UK and some other countries are located in areas where the commercial rents and other service charges are relatively low. This helps it save a lot of money and increase its profits.
Weaknesses of Aldi
The discussion on weaknesses is a key part in the SWOT analysis of Aldi. Aldi faces positioning problems. For instance, many customers see it as a store for cheap and low-quality products. Aldi’s emphasis on low-cost private label items could turn off some customers who prefer branded items. This is a problem, and therefore, it needs more PR and advertising campaigns designed to change the 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 of them occasionally need assistance in product search. Likewise, it is slightly falling behind some of the top competitors in the UK because of a surge in online shopping due to lockdowns.
Aldi thrives by focusing on affordable prices. While this is very useful to attract a lot of customers, it impacts on its profit margins. Likewise, it has not been able to appeal to the high-income customers efficiently.
Aldi’s reputation faced challenges over the years because of a number of scandals. For instance, it was caught in horsemeat scandal in the past in the UK. However, it blamed its supplier Comigel for the scandal.
Aldi was also accused of spying on its employees in German stores in the past. The German magazine Der Spiegel reported that an extensive surveillance operation with cameras and detectives was conducted by the retailer 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
Another important area of analysis in the SWOT analysis of Aldi concerns opportunities. Aldi should move into emerging economies e.g. India and Brazil where the populations are massive and people can in fact afford its products comfortably. Exploring other emerging economies is worth the effort as well.
Aldi also sees great growth opportunities in the USA. It has over 2,100 stores in the country (Smith, 2022). Further growth in the UK is also a great opportunity. In fact, Aldi has an ambitious plan for this market. It has recently focused heavily on increasing its presence in London, the capital of the UK. It aims to double the number of stores inside the M25 by the end of 2025.
Aldi is a good store for health-conscious shoppers. It could increase its brand recognition among millennials with its products. It could also expand its private-label offerings, which have been very limited. Similarly, it has an excellent opportunity to grow its ecommerce business. Its website has been very well-received since the inception.
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, Aldi 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 still shaking the EU. These are real challenges for any retailer, and Aldi is not an exception in this regard.
Summary of the SWOT analysis of Aldi
Aldi is a good choice for shoppers who prefer a low-cost grocery shopping experience. It is also a good choice for health-conscious customers who want organic produce and dairy products at affordable prices. However, as it offers a limited assortment of items at low prices, it may not be an ideal choice for people who want a wide variety of premium branded groceries.
Hope the article ‘SWOT analysis of Aldi – Aldi SWOT analysis’ has been a useful reading. You may also like reading Marketing mix of Aldi and SWOT analysis of Lidl. Other relevant articles for you are:
Stakeholders of Aldi (Stakeholder analysis)
Marketing mix of Lidl
SWOT analysis of Tesco
SWOT analysis of Amazon
Competitors of Tesco
PESTEL analysis of Germany
If you liked this article, please share it with others.
Last update: 10 June 2022
Further Reading/References
Aldi Stores Limited (2022) Award-Winning Aldi Quality, available at https://www.aldi.co.uk/awards (Accessed 09 June 2022)
Kantar (2022) Grocery market share, available at: https://www.kantarworldpanel.com/en/grocery-market-share/great-britain (accessed 07 June 2022)
Smith, P (2021) Number of Aldi Süd stores worldwide by country, available at: https://www.statista.com/statistics/1102737/store-numbers-of-aldi-sued-worldwide-by-country/ (accessed 10 June 2022)
Author: M Rahman
M Rahman writes extensively online and offline 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.
As someone deeply entrenched in business management and marketing, I can delve into the nitty-gritty of SWOT analyses and supermarket strategies. This analysis of Aldi highlights crucial aspects for a comprehensive understanding of its market positioning.
Firstly, the strengths showcased by Aldi revolve around its positioning as a leading discount supermarket chain. Its extensive operations across Europe, China, and the USA underscore its global foothold. The recognition as the "cheapest supermarket" by WHICH? and the "Favourite Supermarket 2021" by Good Housekeeping further solidify its standing among competitors.
The company’s reliance on its private label brands and the Double Guarantee strategy reinforces its commitment to quality. Moreover, strategic placement of stores in areas with lower commercial rents amplifies cost savings, contributing to enhanced profitability.
However, Aldi faces its fair share of weaknesses. Despite its cost-effective approach, some consumers perceive its products as lower in quality due to the emphasis on affordability. The store ambiance and limited staff in outlets have impacted the shopping experience, especially during the surge in online shopping. Moreover, while targeting budget-conscious consumers, Aldi struggles to attract higher-income customers effectively.
The company’s reputation took hits from past scandals like the horsemeat controversy and allegations of employee surveillance. Addressing these issues is crucial for restoring trust and credibility.
Moving to opportunities, Aldi stands to capitalize on emerging economies like India and Brazil, leveraging their burgeoning populations and affordability levels. Further expansion in the USA and the UK, especially within London, offers growth prospects. With a focus on health-conscious shoppers and expanding its private-label offerings, Aldi can tap into the millennial market and bolster its ecommerce platform.
However, threats loom large, primarily from fierce competition with giants like Walmart, Tesco, Carrefour, and Lidl. Lidl emerges as a significant threat in both German and UK markets. Global economic challenges, such as isolationist trends in the USA and Brexit uncertainties, add complexity to Aldi's operations.
In essence, Aldi's strengths lie in its discount model and global presence, but it grapples with brand perception and competition. To stay ahead, it needs to leverage opportunities in emerging markets, cater to evolving consumer preferences, and address weaknesses to fortify its position.
This SWOT analysis offers a comprehensive snapshot of Aldi's standing in the retail landscape, but to truly understand its market dynamics, one should also explore related concepts like the marketing mix, competitor analyses, and broader economic factors shaping the industry.
