ALDI 2015: Radically transforming Anglo Saxon grocery markets

ALDI 2015: Radically Transforming Anglo Saxon Grocery Markets


Release date: February 11th, 2015 (174 pages)
PDF/Powerpoint format. Price: GBP1,990.00

Abstract

ALDI KEY QUESTIONS ANSWERED


MARKET SIZES

What are the sales figures for Aldi’s international and domestic businesses? Which of Aldi Sued or Aldi Nord is bigger? How many stores does Aldi operate?
What are Aldi’s sales densities and KPIs per country? What about the profit margins?

Which markets promise the best returns for both Aldi Sued and Nord and which criteria need to be fulfilled for the discounters to open their distribution centres and stores?

What sales levels will Aldi achieve over the next 5 years? Lidl is the biggest EU retailer already, where will Aldi end up in future?

How are Aldi Sued and Nord performing in their home market of Germany? What learnings can be taken from the domestic market and what counter strategies replicated?

What market share can Aldi reach in the UK? What does the retailer have to do now, to maintain growth rates of more than 30% year on year?

How has Aldi captured the hearts of the Australian shopper? Could it threaten the Coles/Woolworths duopoly?

What is Aldi Sued’s strategy in the US market? How does Aldi Nord owned Trader Joe’s differ from other grocers and why has it developed a cult-like following?

Why does France pose a difficulty for Aldi and fellow discounters? Why is Aldi Nord struggling in Denmark?


GENERAL BACKGROUND AND THE NEED FOR CHANGE

How is the Aldi Group structured and run? What are the key differences between Aldi Sued and Aldi Nord? How does the discounter model work? Why is Aldi so successful at it?

How successful is Aldi with its move away from EDLP towards gentle promotions and a new good/better/best approach to its private label proposition?

What is Aldi Sourcing Asia Limited? Is it the first step to full vertical integration?

How promising are the latest big data approaches at Aldi?

Why is the discounter changing now? What is the strategy evolving to now?


STORE EXPANSION AND FORMAT STRATEGY

How do Aldi Sued’s and Aldi Nord’s store expansion strategy differ?

Will and should Aldi expand into China?

What is the significance of Aldi’s Kilburn store in the UK? Or the store on Duesseldorf’s Koenigsallee?

Why has Aldi Sued teamed up with upmarket rival Rewe and dm in site location in Germany? What are the consequences of this agreement? Who feels the impact? Is this a model for other markets? Is something similar at play in the US?

In what ways is Aldi standardising its business model?

In which markets is Aldi Sued investing going forward?

Filling in opportunities around existing infrastructure have trumped expansion into new territories for now, will this change any time soon – and where?

How much money is earmarked for expansion into Anglo Saxon markets? What emergency cash facilities is the discounter holding back for eventual price wars and foreign expansion?


BRANDS IN DISCOUNTERS

In which markets does Aldi see most potential for the introduction of FMCG A brands and in which will private label remain the main focus?

How much of Aldi’s range is local and its sourcing influenced by the respective store manager? How big is Aldi’s global range?

Is Aldi due to its limited range assortment and SKU count still the biggest global buyer ahead of Wal-Mart?

What are the average sales per SKU per country? How high are sales densities in the countries the discounter operates in?

What is the potential for FMCG A brands at Aldi? What is the brands percentage of the total range at Aldi Sued and at Aldi Nord now? Where can it go? Where will Aldi draw the line?

What are the learnings from Lidl and the more distant past in regards to the introduction of brands? What are the dangers and risks of a ‘brands in discounters’ strategy?

Does the 80/20 rule to SKUs sales apply at Aldi, what lines underperform?

What percentage of SKUs in Aldi consists of brands? Do brands enhance or damage the discounter model? For brands, does listing in discounters enhance or damage reputation? What is the effect on basket size and shopper recruitment? What about general pricing levels?

What does the listing of Coca-Cola in the discounters teach us about the introduction of brands in discounters? Which other FMCG A brands have entered Aldi? Which have declined?

What happened to pricing levels of both Coke and crucially Pepsi after the permanent listing with Aldi? What happened at Lidl?

Was the introduction a success? From both partners’ perspectives (Aldi and Coke)?


AND FINALLY…

Will the migration to online grocery threaten Aldi? Should Aldi make the leap into e-commerce? How has rival discounter Dia been innovative in this area?

Table of contents

Executive summary p12
Introduction: the concept p19
Concept: Product centricity, relentless process optimisation p20
Concept: Modernising one single format, internationalisation, buying power p21
Concept: Adaptability and the online opportunity p22
Concept: Aldi Sued expansion p23
A winning format: The Discounter – success factors p24
The context: EU Grocery Retailing in 2014 p25
Grocery sizes: EU 27, 2009-2013 in ‘000 €bn, e p26
Grocery sizes: Shoppers cut back, shop around and go to hard discounters p27
Grocery sizes: EU 27, 2008-2013 growth in % p28
Grocery sizes: EU 27 growth 2008-13 in % p29
Grocery per capita sizes: EU 27 in 2013 in €, from Finland to Bulgaria p30
Hard discounters: Aldi Sued and Nord p31
Aldi: A completely underestimated business model p32
Aldi: Simplicity, simplicity, simplicity – fine tuning a single format over decades p33
Aldi: Lean SKU count means bigger buying power than Wal-Mart p34
Aldi: Supplier relationships and the quality focus p35
Aldi: Efficient layout and product presentation and the all important SKU count p36
Recent developments: Aldi in 2014 p37
January 2014: Christmas growth boost, fishing for clarity p38
March 2014: Misleading campaigns, modernising retail technology p39
April 2014: Majorca, California, management restructure in AUS, UK job creation p40
June 2014: DC in UK, Hofer’s harmonised traceability, San Diego p41
July 2014: Death of co-founder, German smartphone launch, school uniform p42
August 2014: UK smartphone launch, is it a good idea? p43
September 2014: Price warning to rivals, credit card ban lifted in England p44
October 2014: Caviar controversy and organic produce in the UK p45
October 2014: Good news in Spain and Australia, bad news in Denmark p46
November 2014: UK Christmas ad, tackling China and American expansion p47
November 2014: Management shuffle and job creation in the UK, New Zealand? p48
November 2014: New Zealand?, organic range in Switzerland p49
December 2014: UK developments, credit cards in US p50
December 2014: Entering the Basque region, Irish expansion, telecom in Austria p51
January 2015: UK – Salmonella, Swap and Save, healthy tills p52
Financials and KPIs: Aldi in 2014 p53
Aldi: The original – split into two, an organising principle to manage complexity p54
Aldi: Figures 2010 - 14, international contributions more important than domestic p55
Aldi: Benchmarks, sales densities, Sued ahead of Nord p56
Aldi: A word on Aldi’s profits and margins p57
Aldi: the store estate, rapid internationalisation p58
Aldi: 10,000 stores, more international openings to come p59
Aldi: the domestic market p60
Aldi: €2.0bn more generated in sales in the last two years in Germany p61
Aldi: Germany, data, benchmarks, reaching saturation p62
Aldi: Germany, tweaking the store network, organic ranges, convenience p63
Aldi: Germany, organic, in store bakeries, internationalisation p64
Aldi: Exporting a modus operandi, the direct comparison to the competition p65
Aldi: Aldi Nord relaunching its fresh offer in Germany and NL in 2014 p66
Aldi: Integrated concept with ad push and special placements p67
Aldi: Targeting vegetarians p68
Aldi Sued: Giving away free Panini stickers – a farewell to the pure doctrine? p69
Aldi Sued: First tentative steps into big data – another departure p70
Aldi Sued: Following Lidl’s lead on data warehousing once again p71
Aldi Sued: foreign markets p72
Aldi Sued: Countries, benchmarks, sales, stores, sales densities p73
Aldi: 2013, sales per country in €m, market shares of total grocery universe in % p74
Aldi: UK p75
UK: Brief history and recent 2014 figures p76
UK: Aldi winning the price war p77
UK: Creating headaches for big four, shoppers shaping strategy p78
UK: Diversifying range p79
UK: Low price and simplicity winning over customers p80
UK: Investment spree, store opening plans, job creation, convenience stores p81
UK: Two new DCs to support 60 new stores, widening of the store footprint p82
UK: Suppliers and infrastructure simply cannot keep up with 30% growth p83
UK: Challenges, continuing to steal market share, to be bigger than Waitrose? p84
UK: Do Aldi and technology mix well? p85
Aldi: Australia p87
Aldi Sued: Australia, not as price aggressive as elsewhere p88
Australia: Customers embracing Aldi, challenging the duopoly p89
Australia: Aldi takes on Coles and Woolworths p90
Australia: Still work to do, Aldi’s positioning in the grocery market. p91
Aldi: US p92
US: Aldi Sued – a rising force in US grocery, operates from coast to coast p93
Aldi: USA, investing $3.0bn, simply living, merger creating a threat? p94
Aldi: USA, shift from entering new markets to saturating existing markets p95
Aldi: Switzerland p96
Aldi: Switzerland – market entry lowering price points of the entire retail universe p97
Aldi and Lidl: Switzerland – the discount grocery market scene p98
Aldi: Switzerland, extension of organic range p99
Aldi Nord: foreign markets p100
Aldi Nord: Countries, benchmarks, sales, stores, sales densities p101
Aldi Nord: 2013, sales per country in €m, market shares of total grocery universe in % p102
US: Aldi Nord – Trader Joe – highest sales density in the USA p104
US: Aldi Nord – Trader Joe’s innovative take on grocery (I) p105
US: Aldi Nord – Trader Joe’s innovative take on grocery (II) p106
Aldi: France p107
France: The anomaly, buying groups to counter the price war p108
France: Margin compression, launching coffee capsuless p109
Aldi: Spain p110
Aldi Nord: Spain, expansion into Majorca p111
Aldi: strategy section p112
Aldi: Staying offline, apart from wines in AUS, but for how much longer? p113
Dia: The first discounter to launch a click & collect service p114
Dia: Cheaper than in store, faster than drives and €30 average baskets p115
Dia: Catering to pedestrians, trial widened out, France only for now – now closed p116
Aldi: location, format and expansion strategy p117
Aldi: Store expansion strategies, Sued to fill in, Nord to modernise p118
Aldi: China expansion – extremely unlikely for now p119
Aldi: China – it’s not going to happen p120
Aldi: China – more reasons to remain skeptical p121
Aldi: Expansion financed out of cash flow, location choice criteria p122
Format strategy: Aldi convenience, the Kilburn Store in London p123
Format strategy: Aldi convenience, the opportunity in UK and Germany p124
Aldi: teaming up with competitors p125
Aldi Sued & Rewe: teaming up in Germany, creating destination status p126
Aldi Sued & Rewe: From competition to cooperation p127
Aldi: the back end strategy, logistics and vertical integration p128
Aldi: Standardisation and internationalisation, exporting a success model p129
Aldi: Logistics and the back end, standardisation and keeping it simple p130
Strategy: Aldi Sourcing Asia Limited takes control of non-food sourcing p131
Aldi: Sourcing strategy, tentative steps into vertical integration p132
Aldi: from Quality Control to CSR p133
Aldi: ranging strategy p134
Aldi: Minimising complexity, keeping OSA simple, product centricity p135
Aldi: Always the late second mover, only one can be the cheapest p136
Actionable recommendations: learning from the hard discounters p137
Aldi: brands in discounters p138
Aldi: Average € per SKU per country in 2013, massive opportunity in DE and the US p139
Aldi: Does the 80/20 principle apply at Aldi? Loss leaders, global synergies p140
Aldi: Sued ahead on average SKU per store basis, how big is the global range in €? p141
Brands in discounters: The introduction, a win-win or a clear threat to the model? p142
Brands in discounters: Lidl, Edeka’s Netto, Aldi’s FMCG brands, Aldi Nord’s big opportunity p143
Brands in discounters: 8 reasons to be skeptical – reverting to type, limited space p144
Brands in discounters: 8 reasons to be skeptical – conservatism, cannibalisation p145
Brands in discounters: 8 reasons to be skeptical – Lidl’s cut backs, organisational set up p146
Brands in discounters: 8 reasons to be skeptical – strategic fit, the control issue p147
Brands in discounters: what FMCG companies need to consider p148
Brands in discounters: Questions from retailers, just a short term tactic, not a strategy? p149
Brands in discounters: FMCG brands, price points and pack sizing? p150
Brands in discounters: Lessons from Hofer Austria and Lidl Germany p151
Brands in discounters: the Coke listing in Aldi in Germany p152
Aldi: Coca-Cola listing in Aldi off to a great start, at moderate price p153
Lidl: The Coca-Cola wars in Germany, delisting ... for a few days p154
Lidl: Coke losing €150mn in sales through the boycott, Lidl losing shoppers p155
Lidl: The Coca-Cola wars and Lidl’s warning to FMCG p156
Aldi: Coca-Cola listing, 1.4m new households shopping the category p157
Aldi: Coca-Cola listing in Aldi a clear success p158
Brands in discounters: other case studies p159
Aldi: l’Oreal says no to Aldi p160
Aldi: Top spirits brands listed p161
Aldi: Procter & Gamble lists in Aldi in Germany for the first time p162
Aldi: P & G brands in standard range or just one off promotions? p163
Aldi: following Lidl’s work on brands p164
Aldi: Listing Jack Daniels just in time for Christmas p165
Aldi: The verdict on listing brands – despite sales uplifts, only for the most powerful p166
Outlook: and forecast p167
Outlook: Improvements to be made in the UK, better non-food promotions p168
Outlook: Will Aldi introduce more brands? Should it? p169
Outlook: Will Aldi introduce more brands? Should it? Widening the range p170
Outlook: Long term outlook, ease of expansion p171
Outlook: UK outlook specifically, threat of online p172
Sources p173
Chart 1: A winning format: The Discounter – success factors p24
Charts 2 & 3: Grocery sizes: EU 27 2008-13 growth in % p29
Charts 4 & 5: Grocery per capita sizes: EU 27 in 2013 in €, from Finland to Bulgaria p30
Chart 6: Aldi: 2013, sales per country in €m, market shares of total grocery universe in % p74
Chart 7: Aldi Nord: 2013, sales per country in €m, market shares of total grocery universe in % p102
Chart 8: Actionable recommendations: learning from the hard discounters p137
Table 1: Grocery sizes: EU 27, 2009-2013 in ‘000 €bn, e p26
Table 2: Grocery sizes: EU 27, 2008-2013 growth in % p28
Table 3: Aldi: Figures 2010 - 14, international contributions more important than domestic p55
Table 4: Aldi: Benchmarks, sales densities, Sued ahead of Nord p56
Table 5: Aldi: the store estate, rapid internationalisation p58
Table 6: Aldi: Germany, data, benchmarks, reaching saturation p62
Table 7: Aldi Sued: Countries, benchmarks, sales, stores, sales densities p73
Table 8: Aldi: 2013, sales per country in €m, market shares of total grocery universe in % p74
Table 9: Aldi Nord: Countries, benchmarks, sales, stores, sales densities p101
Table 10: Aldi Nord: 2013, sales per country in €m, market shares of total grocery universe in % p102
Tables 11 & 12: Aldi: Average € per SKU per country in 2013, massive opportunity in DE and the US p139