Aldi Corporate Strategy

Aldi’s focus is on the Midlands. The retailer still does not have a real nationwide coverage, nor has it the most respected standing on the UK retail market, where discounting, at least until recently - had a downcast character attached to it.

However, its image has continually and clearly improved over the past years. Aldi is on a major expansion tour for the coming years, with the discounter trying to accelerate the change of image in an attempt to attract more upmarket customers such as middle-income families.

And views are really changing - which is simply reflected in the fact that market leader Tesco in early 2008 was reported to internally trial a discount store concept at its headquarters. Like its discount competitor Netto (Dansk Supermarked), Aldi has seen a perception shift among customers with many more middle class consumers coming into Aldi’s stores - a fact that has given Aldi the confidence to push the button on expansion.

The year 2008 might be seen in the future as a definitive tipping point for the discount channel – the stigma is gone and Aldi is now home to the smart shopper, rather than the poor shopper, in the UK. “We feel we’ve got the discount formula for Aldi right in the UK, which we didn’t in the 1990s. Now we are offering a quality discount model”, It said that in 2008 it delivered a massive uplift in socio-economic group ABC1 customers, who would now account for half of those coming into its stores.

Nonetheless, even Aldi is feeling the effects of the recession in the UK. Its longstanding Managing Director surprisingly left the company in August 2009 and was later replaced by Aldi Süd’s Australian Buying Director, Matthew Barnes.

Aldi makes just under a fifth of its turnover from ‘special buy’ promotions of non-food goods which vary with the season - especially lucrative parts of its ranges when compared with groceries. “This is not an easy climate to persuade people to buy a new television, a new water butt, a new wheelbarrow. People are in the mode at the moment of thinking the old one’s OK,” Aldi said. However, food sales remained strong and were comfortably outperforming rivals - even excluding new store openings - despite the launch of a range of ‘Discount Brands’ by market leader Tesco.

Aldi is planning to increase its UK store base by 50 additional outlets per annum, with the expansion strategy also involving refurbishments of existing outlets and store re-locations. All in all, Aldi believes there is the potential to establish a network of 1,500 stores in the British Isles including Ireland, although is is difficult both to obtain suitable sites and to find the right sort of people.