Aldi - Hard discounters 2012: the winning format

Aldi - Hard Discounters 2012: The Winning Format

Release date: September 6th, 2012 (129 pages)
PDF/Powerpoint format. Price: GBP950.00


An unprecedented growth story is unfolding, as austerity bites across the west and food price inflation will filter through into higher retail prices next year. One retailer that stands to benefit hugely from this changed macroeconomic environment is Germany’s Aldi. The retailer currently achieves record growth rates in the UK (sustained at well above 20% year on year) and in Australia, where further expansion is already financed out of the cash flow generated in the country.
The huge opportunity going forward for Aldi Sued’s stores as well as for Trader Joe’s, Aldi Nord’s premium organic discounter is the US, where the efficiency of the business model meets a consumer willing to trade down as never before. Meanwhile back in the old world, Aldi Nord is rapidly updating its stores and investing heavily into making the format fit for the next decade.
The big questions rippling through the sector is the introduction of more FMCG A brands across a number of markets, which the two businesses coordinate tightly. We predict that a more attractive SKU proposition increasing frequency (if not necessarily penetration) combined with the store updates from both Nord and Sued will ensure that Aldi will continue to outperform.
This data rich report from the EU’s premier experts on hard discounters goes behind the facade and analyses the business model and the poorly understood proposition and success factors of the discounters, with key insights and learnings for other businesses. It argues that Aldi’s principles need to be understood in the original context of Germany’s retail sector of the 1950s and subsequent development that has created the company’s unique culture and business practices, which have proven to be easily replicable and exportable around the globe.

Table of contents

Executive summary p17
Context – the Macro-economic outlook for the EU p20
GDP sizes: EU 27, 2011 in €bn, the structure from Germany to Malta p21
GDP sizes: EU 27, 2007-2011 in ‘000 €bn p22
GDP sizes: EU 27, 11 countries still lagging behind their 2008 levels p23
GDP sizes: EU 27, Currency devaluations, Poland keeps momentum going, ECB action p24
Unemployment: EU 27, annual average 2011 (%) from Spain to Austria p25
Unemployment: EU 27, Misery in the periphery while... p26
Unemployment: EU 27, ...Germany roars on due to the right policy mix p27
Inflation: Euro Area and EU27, 2006-2011 (HICP), % p28
Inflation: EU 27, deflation avoided, lost decade in store? p29
Inflation: Euro Area 17, 2006-2011 (HICP), %, welcoming Estonia p30
Interest rates: ECB and BoE, record low rates and quantitative easing p31
Interest rates: breathing space for southern Europe, LTRO p32
Context – EU Retailing in 2012 p33
Retail sizes: EU 27, 2007-2011 in ‘000 €bn p34
Retail sizes: EU 27, crisis has left a deep, deep scar p35
Retail sizes: EU 27, 2007-2011 growth in %, CAGR p36
Retail sizes: EU 27, a sector in turmoil, e-commerce, housing markets, ageing populations p37
Per capita retail spend: EU 27, 2011 in €, from Luxembourg to Romania p38
EU Grocery Retailing in 2012 p39
Grocery sizes: EU 27, 2007-2011 in ‘000 €bn p40
Grocery sizes: shoppers cut back, shop around, trade down and go to hard discounters p41
Grocery sizes: EU 27, 2007-2011 growth in %, CAGR p42
Grocery growth rates: EU 27 2007-11 in %, growth in Poland, decline in Ireland p43
Grocery growth rates: Ireland as a template for the rest of the periphery? p44
Grocery sizes: The leading countries, Top 3 take one of every €2 spent p45
Grocery share of total retail: EU 27, 2007-2011 in % p46
Grocery share of total retail: Clear crisis impact - all but four show higher share again p47
Grocery per capita sizes: EU 27 in 2011 in €, from the UK to Bulgaria p49
Hard discounters, Aldi Sued & Nord p50
Aldi: A completely underestimated business model p51
Aldi: Simplicity, simplicity, simplicity – fine tuning a single format over decades p52
Aldi: efficient layout and product presentation and the all important SKU count p53
Aldi: Lean SKU count means bigger buying power than Wal-Mart p54
Aldi: Supplier relationships and the quality focus p55
Recent developments p56
Aldi: recent developments, truths, brands, store modernisation p57
Financials p58
Aldi: the original – split into two, an organising principle to manage complexity p59
Aldi: figures, international contributions now more important than domestic p60
Aldi: benchmarks, sales densities per country, Sued ahead of Nord p61
Aldi: a word on Aldi’s profits and margins p62
Aldi: the store estate, rapid internationalisation p63
Aldi: 10,000 stores, more international openings to come p64
Aldi Sued and Nord in Germany p65
Aldi: Germany, data, benchmarks, reaching saturation p66
Aldi: Germany, tweaking the store network, organic ranges, convenience p67
Aldi: Germany, organic, in store bakeries – outlook p68
Aldi: exporting a modus operandi, the direct comparison to the competition p69
Aldi Sued p70
Aldi Sued: Countries, benchmarks, sales, stores, sales densities p71
Aldi Sued: 2011, sales per country in €m, market shares of total grocery universe in % p72
Aldi Sued: rapid growth in recession plagued Anglo Saxon markets, retreat from Greece p73
Aldi Sued: shift from entering new markets to saturating existing markets, the US opportunity p74
Aldi Sued: Investing in Australia, UK, stellar growth, the figures p75
Aldi Sued: UK, choosing poor site locations in the 1990s, store disposals p76
Aldi Sued: UK, the golden opportunity, record market shares, future plans, where’s the ceiling? p77
Aldi Sued: UK, new private label launch, moving towards good, better, best, a good idea? p78
Aldi Sued: Hungary as the test bed for new developments, 6 P&G brands, an end to EDLP? p79
Aldi Sued: Hungary – a template for the rest of the group? p80
Aldi Sued: Switzerland – market entry lowering price points of the entire retail universe p81
Aldi Nord p82
Aldi Nord: Countries, benchmarks, sales, stores, sales densities p83
Aldi Nord: 2011, sales per country in €m, market shares of total grocery universe in % p84
Aldi Nord: Trader Joe’s – highest sales density in the USA p85
Aldi Nord: Trader Joe’s – serving the organic and natural trend, a honest proposition p86
Aldi Nord: France, rapid space growth as the LME opens the market to discounters p87
Aldi Nord: France: the introduction of Coke, Netherlands: still ahead of Lidl, Poland p88
Location, format and expansion strategy p89
Aldi: Store expansion strategies, Sued to fill in, Nord to modernise p90
Aldi: The expansion into Eastern Europe, East Germany as a test case p91
Aldi: expansion financed out of cash flow, location choice criteria p92
Aldi Nord: innovating the format, raising the average space above Aldi Sued p93
Aldi Nord: new generation, new thinking, new location choice criteria p94
Aldi Sued & Rewe: teaming up in Germany, creating destination status p95
Aldi Sued & Rewe: From competition to cooperation p96
Aldi Sued: Sale and leaseback deals, funds earmarked for Anglo Saxon expansion p97
Aldi Sued: standardisation and internationalisation, exporting a success model p98
Aldi: the non food footfall driver, spend migrating online, redundant space can be recycled p99
Aldi: Logistics and the back end, standardisation and keeping it simple p100
Strategy p101
Hard discounters: Strategic bifurcation process between two business models p102
Aldi: The exception p103
Aldi: going hard, minimising complexity, keeping OSA simple, product centricity p104
Aldi: always the late, second mover, social media, only one can be the cheapest p105
Aldi: The business model p106
Actionable recommendations: learning from the hard discounters p107
Outlook and forecast p108
Aldi: a new generation in charge, adaptability, tailwinds from the economy p109
Aldi: international expansion and private ownership benefits p110
Aldi: a debt free business, excess liquidity and emergency cash facilities p111
Aldi: doubling share in growth markets, stable in mature, where will it be in € terms in 5 years? p112
Brands in discounters – the data p113
Aldi: average € per SKU per country in 2011, massive opportunity in DE and the US p114
Aldi: Does the 80/20 principle apply at Aldi? Loss leaders, global synergies p115
Aldi: Sued ahead on average SKU per store basis, how big is the global range in €? p116
Brands in discounters p117
Brands in discounters: the introduction, a win-win or a clear threat to the model? p118
Brands in discounters: Lidl, Edeka’s Netto, Aldi’s FMCG brands, Aldi Nord’s big opportunity p119
Brands in discounters: 8 reasons to be skeptical, reverting to type, limited space p120
Brands in discounters: 8 reasons to be skeptical, conservatism, cannibalisation p121
Brands in discounters: 8 reasons to be skeptical, Lidl’s cut backs, organisational set up p122
Brands in discounters: 8 reasons to be skeptical, strategic fit, the control issue p123
Brands in discounters – what FMCG companies need to consider p124
Brands in discounters: questions from retailers, just a short term tactic, not a strategy? p125
Brands in discounters: FMCG brands, price points and pack sizing p126
Brands in discounters: lessons from Hofer Austria and Lidl Germany p127
Sources p128