Aldi Business Strategy Case Study
Key Learning Outcomes
- Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
- Analyse the UK food retailing industry and how the five forces have affected Aldi and rival supermarkets and the impact on industry structure, attractiveness, and profitability.
- Understand how Aldi has managed to defend against intense competition from Sainsburys, Lidl and Tesco and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.
Analyse the competitive structure of the UK food retailing industry using Porters five forces.
1.0 INTRODUCTION
The UK food retail industry is highly competitive with four major players Tesco, Sainsburys, Asda and WM Morrisons supermarkets controlling a 69.8% of the UK’s grocery market. Aldi supermarket on the other hand is one of the fast-growing supermarkets in the UK with a 6.8% market share, making it fifth biggest supermarket in the UK, up from 11th (Mintel 2017b; Statista 2018). With over 700 stores currently across the UK and Ireland and a further 300 planned by 2022, Aldi's aggressive expansion plans are changing the industry structure of the UK food retailing industry and nature of rivalry (Mintel 2017b; Cox 2018). The analysis below shows how different competitive points affect Aldi supermarket.