FOUNDATION TO BUSINESS STRATEGY
ALDI
ALDI is one of the world’s leading grocery retailers with more than 7,000 stores across 70 countries. The company originates from Germany, where it was founded in 1913 as one of the first retailers to offer self-service. Since opening its first store in 1913, ALDI has established itself as a reputable retailer operating in international markets including Germany, Australia, UK, and the U.S. What distinguishes ALDI from its competitors is its pricing strategy without reducing the quality of its products. In fact, in some cases ALDI’s products are 30% cheaper than those offered by its competitors. ALDI can do this because the business operates so efficiently. ALDI has operated in the UK since 1990, and now has over 500 stores in the UK and Ireland employing in excess of 20,000 people.
ALDI’S POLICIES:
ALDI does not have a clear defined Vision and mission statements, however it has clearly defined policies based on which it could create its competitive position in the market.
ALDI’S Policies are based on ‘What if a grocery store challenged the typical retail business model?’ALDI’s business model enables to provide the customers the highest quality products at the lowest possible prices. This value stems from the numerous efficiencies and innovations instituted at every level of ALDI’S operation. The following are the cost saving strategies that ALDI adopts: * Customers bring their own bags or buy our reusable bags to save money * Modest store size, plus eliminating non-essential grocery store services means ALDI captures the very essence of conservation and savings for customers * In-house distribution network streamlines operations and maximizes efficiencies, resulting in even greater savings for customers * Not operating 24 hours a day lowers labor, energy & rent costs, with savings passed on to customers * Specially designed packaging doubles as product displays, saving time and money on stocking and replenishment * Innovative cart rental system helps keep prices low and eliminates time spent retrieving carts

ALDI'S Success (Stakeholder)
The grocery retail industry is a highly competitive market. ALDI understands that its customers want value for money, but do not want to compromise on quality ALDI is able to offer quality products at low prices as it buys in great volume. The fact that ALDI buys such large quantities of these products allows greater leverage in negotiating the best possible prices with its suppliers. Buying large quantities of each product allows ALDI to pass these savings to its customersALDI’s has developed close, long-term relationships with its suppliers, believing that longevity and trust in its business relationships are essential to ensure high quality and reliable products.
ALDI wants every employee to have a rewarding career, with opportunities to grow and develop, whether they work in stores, the distribution center or in management teams. ALDI expects its people to be committed, hard-working and take ownership of their responsibilities. In return, employees receive market leading salaries and unrivaled progression opportunities within the retail sector. Over 85% of its Directors are recruited from within the company, demonstrating the importance placed on training and development and rewarding performance. ALDI is able to deliver excellent customer service due to its highly motivated and skilled workforce. In order to meet the increased recruitment demands placed on the business, ALDI launched the ALDI Academy. The Academy is a new national department to improve and standardise the training and recruitment processes at each stage of the employee life cycle. ALDI is keen for its employees to develop and to use their own judgement in their specialist areas. From the moment they start, with a thorough induction, staff are given trust and responsibility. Their efforts are recognised and, through regular performance reviews, are motivated to improve. ALDI’s management structure is designed to encourage co-operative decision making and foster a sense of trust. For those with a degree, ALDI has a Graduate Area Management Programme that is one of the most rewarding and sought-after in the UK. Graduates are trained in all aspects of the business, from store operations to finance, property to logistics and after a year are expected to be a fully functioning Area Manager, looking after three to four stores. ALDI believes that quality products should be made responsibly and is committed to an ethical supply chain. This means that making or growing goods do as much good and as little harm as possible to the communities and environments in which it takes place. This includes a clear regard for workers’ and human rights. ALDI makes sure that the products it sells have all been grown, caught and made with care for the environment and that all workers are treated fairly. It’s important to ALDI that it is seen as a trusted company. Nearly half of all ALDI’s products are produced in the UK, with its range of everyday fresh meats being 100% British. It also offers regionally sourced fruit and vegetables, helping consumers to access a good product range, and promoting sustainability. "We recently became the first major grocery retailer to sign up to the NFU’s (National Farmers Union: This ensures that farmers receive a guaranteed minimum price) Fruit and Veg Pledge, which is a series of initiatives that support British producers. We’re also the only British retailer that sources all of our core range of fresh meat from British-based Red Tractor assured farms" claims ALDI.
Ethical Working Conditions: Many of ALDI products are grown and manufactured in developing countries where social and environmental standards can be below acceptable norms. ALDI believes that everyone involved in producing our products should be treated fairly and with respect for their human rights, without exploitation. Together with their business partners, ALDI strive to establish and maintain social and environmental compliance standards within its supply chain. The ALDI Supplier Standards are set out in the CR policy and reflects the minimum requirements, wherever possible ALDI try to exceed the minimum requirements. Suppliers are included as part of the ALDI contractual Terms and Conditions, which all suppliers are required to sign prior to entering into business with ALDI. Suppliers, in turn, are expected to apply them to all subcontractors along the entire production process. The ALDI Supplier Standards reflect a commitment to human rights and fair labour standards and are based upon the UN and ILO conventions.
Monitoring the supply chain, ALDI has a Social Monitoring Programme in place that focuses on suppliers in high risk commodity areas, such as textiles. These are chosen due to their tendency to be manufactured in countries with lower social and environmental standards than in the UK. As part of this programme suppliers must become members of the Supplier Ethical Data Exchange (Sedex), or The Business Social Compliance Initiative (BSCI)– these are not-for-profit organisations for businesses committed to improving ethical standards in their supply chain. Individual profiles of supplying sites together with ethical audit data are shared via an online, independent database, improving the transparency of the supply chain. Audits by independent third-party organisations confirm that suppliers meet our ethical targets. These targets are based on the supplier's ability to demonstrate continual improvement, both qualitative and quantitative, in the ethical standards of their production sites. ALDI informs customers about what is happening in stores and listens to what they need, including their ethical concerns. Its promise is to always deliver quality goods at the best possible price. ALDI works with experts, the government and other bodies to promote healthy choices. It has: 1) signed up to 14 of the government’s Responsibility Deal Pledges. These include lower salt levels and removing trans-fats; 2) teamed up with Change4 Life to encourage and promote healthier lifestyles; and 3) worked with an independent nutritionist to reduce the amount of calories and salt in products. A conflict could arise between suppliers – wanting to supply less healthy choices – and customers. ALDI would always look at what is best for the customer.
To lower its environmental impact, ALDI works to reduce its carbon footprint through being energy efficient; minimising the impact of its refrigerant liquids and by meeting leading global standards for green buildings. In terms of its waste, it follows the practice of ‘reduce, reuse, recycle’. ALDI places great importance on supporting its communities, set out through its CR Policy. The business begins this relationship from the moment it decides to construct a store. For instance, in Knutsford, Cheshire, ALDI supported a number of community initiatives before the opening of a store in the town. ALDI’s community engagement sought to create goodwill, introduce local shoppers to the brand and its products, and to build long lasting relationships. ALDI supported a number of community barbeques in association with local schools with free products and a chef, and the Knutsford Sunday in the Park community fundraiser event, raising funds for the Children’s Burns Foundation. In addition, ALDI sponsored the Egerton Youth Football Club, providing funds for youth sport throughout the season. ALDI also sponsored the varsity fixtures between the Universities of Bath and Exeter.
COMPETITIVE LANDSCAPE
Grocery retailers in the UK continue to be led by the established "big four" players: Tesco, J Sainsbury, ALDI and WmMorrisons. Tesco accounted for 22% value share in 2015, ranking it far ahead of J Sainsbury with 13% and ALDI with 12%. But the big four retailers - Tesco, ALDI, Sainsbury's and Morrisons - have been facing a game-changing threat as German competitor ALDI cut into their market share with no-frills shopping that is marking a generational shift in retail patterns.
TESCO:
Tesco is a leading food and grocery retailer in the UK. It also retails non-food products. The company operates in Europe and Asia. Tesco, one of the leading retailers in the world, has been building a sustainable business model over the years through diversification into new geographies and value oriented retailing. Tesco has increased focus on its retailing services which comprises online retailing, banking, telecom and market research. All of these services complement each other as well as Tesco's core retail operations. Additionally, the company offers lower pricing as it enjoys the superior bargaining power
ASDA:
ASDA Stores Limited, a wholly-owned subsidiary of Wal-Mart, is a grocery and general merchandise retailer in the UK. The company is headquartered in Leeds, the UK and employs about 2,100,000 people. ASDA was acquired by Wal-Mart in 1999 and thus became part of the world's biggest retailer. ASDA’s implementation of Wal-Mart's low pricing strategy has yielded positive results. Thus, the Wal-Mart umbrella provides ASDA with strong brand recognition. In the UK, ASDA offers its products through varied store formats which make it a ‘one stop shop’ for food and non-food items and help it in catering to a diverse customer base.
SAINSBURY:
Sainsbury's is one of the leading retail chains in the UK. It offers a variety of products through a network of 1,203 stores, including 611 convenience stores and 592 supermarkets. The company also provides Internet-based grocery business with Sainsbury's delivering to over 190,000 customers every week. The company's significant presence in the UK retailing market provides it with a distinct competitive advantage to gain most from favourable market dynamics. Sainsbury's has a robust portfolio of own-labelled products. It has developed a strong private brand product portfolio over the years. In 2012, Sainsbury's re-launched its core own label 'by Sainsbury's' brand, which currently has over 7,000 new or improved products.
MORRISON:
Wm Morrison Supermarkets PLC (Morrison or 'the company') is one of the largest supermarket chains in the UK, offering a range of branded and own label products. The company primarily operates in the UK. It is headquartered in Bradford,Morrison is one of the largest supermarket chains in the UK, offering a range of branded and own label products. The company's operations are vertically integrated, which allows it to manufacture, distribute and retail a majority of its fresh meat and dairy requirements, and process/package its fresh fruit and vegetables in-house. Morrison's vertically integrated operations allow it to source and process fresh food in its own facilities, which is a major differentiating factor offering a significant competitive advantage.
Conclusion: Since opening its first store in 1913, ALDI has established itself as one of the most reputable retailers in the global business market by providing great value and quality. It competes successfully in the UK supermarket sector by providing quality goods at low prices and is keen to maintain good relationships with all of its stakeholders. According to research and consulting firm Him! "more than 31% of shoppers at ALDI (and Lidl- another German retailer) are now from the AB demographic (A being upper class, B, middle class).Just two years ago, their share of this segment was as little as 12%". For the big four, the recent gains of ALD is like the arrival of a new predator. ALDI is not successful because it is cheap, they are successful because they are cheap but still offer consistent quality. The quality is about 10% lower than the classical brands but the prices are 30% lower which then means that the customer gets more value per pound spent.However, ALDI, is facing tough competition from the bigger brands in the UK, which, requires ALDI to compete strategically in the market to increase its competitive position.
-----------------------------------------------End of the case------------------------------------------

--------------------------------------------
[ 2 ]. http://ALDIuscareers.com/about-ALDI/our-philosophy
[ 3 ]. https://ALDIsuppliers.co.uk/GCAAwards.aspx
[ 4 ]. https://corporate.ALDI.co.uk/en/responsibility/suppliers/new-milk-pricing/
[ 5 ]. Tesco PLC SWOT Analysis' 2015, Tesco, PLC SWOT Analysis, pp. 1-11, Business Source Premier, EBSCO host, viewed 7 February 2016.
[ 6 ]. ALDI Stores Limited SWOT Analysis' 2015, ALDI Stores Limited SWOT Analysis, pp. 1-7, Business Source Premier, EBSCO host, viewed 7 February 2016.
[ 7 ]. J Sainsbury plc SWOT Analysis' 2015, J Sainsbury, PLC SWOT Analysis, pp. 1-7, Business Source Premier, EBSCOhost, viewed 7 February 2016.
[ 8 ]. Wm Morrison Supermarkets PLC SWOT Analysis' 2015, Wm Morrison Supermarkets, PLC SWOT Analysis, pp. 1-7, Business Source Premier, EBSCOhost, viewed 7 February 2016
[ 9 ]. Peter, S. (2015). How the discounters are beating the supermarkets - BBC News. [online] BBC News. Available at: http://www.bbc.com/news/business-34315643 [Accessed 7 Feb. 2016].