The strategy adopted by Aldi is its competitive pricing that involves no reduction in its products quality. The strategy has been the most impressive due to the efficiency of its business operations. I support the notion that Aldi should set up their stores near Wal-Mart stores. The factors that Aldi stores employ in order to build their stores are customer friendly than those of Wal-Mart, These factors will give Aldi an increased marketing advantage. The store layout of the Aldi facilitates the economical use of space and cut down on costs. People are not driven by how Wal-Mart stores waste their precious time. These stores are so large to the extent that it becomes so difficult to locate the different products. Audi stores are small, and this makes it possible to use less time to find resources.
The Wal-Mart stores are overcrowded, and this has reduced the vehicle parking space. People who own vehicles find it difficult to go shopping in these stores. The factor has reduced the number of customers coming to purchase products and hence this has resulted in the development of profit gaps. Despite Aldi having a less space, it has allocated enough space for parking vehicles. Aldi can take advantage of this poor customer services, and this will lead to increase in total revenue. Aldi should find their stores near Wal-Mart ones because of low product prices offer to the customers. The low product prices by Aldi increases the purchasing power by customers hence increase in total dividends. The small stores structures, spacious car parking areas and low commodity prices have given Aldi an edge of the market over Wal-Mart.
The five forces of Porter are essential to analyze Aldi's industry. The supplier bargaining power among many supermarkets can rise or fall. Aldi, which offers its line of products, accrue the same benefits as other supermarkets (Brandes 109). The suppliers have little bargaining power over other supermarkets. Threat is the second force in porter five that affects Aldi. The provision of the same products among the retailers means there are no threats of substitutes. The UK government encouraged its citizens to adopt the habit of eating organic food and living healthier. The government policy assisted supermarkets to offer a wide range of products and add value to consumers by providing them with fresh, high-quality grocery products. This developed into a negative factor because it meant customers were paying for the desirable goods (Schermerhorn 146).
The buyer's bargaining power in the supermarkets is influenced by the product prices, but the quality of the goods allows them to have flexibility on the impressive brand. This leaves the supermarkets to adopt pricing strategies to attract a desirable number of consumers. These strategies are gaining popularity to highlight the responsiveness towards the consumer purchasing power and dynamic consumption trend. Although Aldi employs these techniques, it needs to concentrate more on value adding activities rather than price. The threats of new entrants in Aldi's industry are low due to the dominance of the market by global players. The new entrants can penetrate this market through the foreign backup (Hill 45).The industry has a low level of rivalry because of low threats of substitutions and entrants (Schermerhorn 147). Some supermarkets are considering developing products that trend with the consumer tastes. As results, fewer players are becoming more dominant on the market.It would be wise for Aldi to employ a tactic that is less risky and less capital intensive.
Work Cited
Brandes, Dieter, and Nils Brandes. Bare Essentials: The Aldi Success Story. Linde Verlag GmbH, 2015
Hill, Charles, Gareth Jones, and Melissa Schilling. Strategic Management: Theory: An Integrated Approach. Cengage Learning, 2014.
Schermerhorn, John R. Introduction to management. John Wiley & Sons, 2011.
