Aldi: The German Wal-Mart?


Code : COM0022

Year :

Industry : Retailing

Region : Germany

Teaching Note:Available

Structured Assignment :Available

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The Genesis World War II had a telling effect on Germany's economy. People were looking for cheap sources to meet their basic day-to-day necessities. To meet their demand, the brothers Karl and Theo Albrecht started a grocery store, 'Albrecht Discounts' (Aldi) in Essen (Ruhr Valley), Germany, in 1948. The privately held store had a simple layout, restricted range of offerings, and the products were sold at frugal prices. The company grew rapidly and by the late 1950s, from one store in Essen it had proliferated into 350 Aldi stores across Germany. In 1960, the brothers divided the company into Aldi Sud (South) and Aldi Nord (North)...

Aldi's Business Model The Aldi success has been due to its unique business model. Aldi's business model satisfies the major components of the 4P model Product, Place, Price and Promotion...

The Future Though Aldi poses a threat to the global supermarket chains, analysts doubt the viability of Aldi's business model. In the U.K., after 14 years of operations, Aldi has been able to earn only 1% of the grocery market share. Meanwhile, the hard discounter Lidl, a unit of Neckarsulm based Lidl & Schwarz Group, surpassed Aldi in France and Britain and is planning to enter Eastern Europe, where Aldi does not have a presence (as of 2004). However, Aldi, cashing on its unique business model, wants to step up its operations in Wal-Mart's turf. Having entered the U.S. market in 1976, Aldi in 2004 has sales of $ 4.8 billion in North America...

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