Aldi Inc. - Optimizing Profits in Economic Recession

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Case Details:

Case Code : BSTR348
Case Length : 11 Pages
Period : 2007-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Aldi Inc.
Industry : Retail
Countries : US, Germany

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Aldi had undertaken a number of strategic initiatives to maximize the benefits it got because of recession. In an effort to attract wealthy consumers, it opened its stores in affluent neighborhoods. The company also changed the layout of its new stores so that they looked bigger than its usual stores in the US.

It expanded rapidly so that it could be present in every key market in the US. Aldi also changed its product strategy and included many private label products, a strategy which had proved successful in its home market. In order to promote its image as a ‘no frills discount food and grocery retailer', Aldi also increased its advertising budget in the US.

Industry experts opined that the recession in the US economy that started in December 2007 helped Aldi increase its sales. Some analysts attributed Aldi's success in the US to its ability to offer quality products at low prices. They were of the opinion that in future also the consumers would stay with the company because of the quality of the private label products it offered. According to David Livingston (Livingston), Principal of DJL Research based in Pewaukee, Wisconsin, "When the economy recovers, ALDI will still be doing well and will probably be even stronger after gaining additional customers. Why would customers not shop ALDI just because they have more money? They have excellent products at the lowest prices."⁶...

Excerpts >>

6] Kathie Canning, "A Frugal Force," www.privatelebelbuyer.com, April 2009.

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