1. How does ALDI’s strategy lead to a competitive advantage? How does the company achieve
The business strategy concept implemented by Aldi can be regarded as very simple but
effective. Aldi’s core business concept is to reduce cost in every way. Although both Aldi and
Wal-Mart are the successful retailers by adopting cost reduction strategy, Aldi is very different
from Wal-Mart with regard to its method of implementation. Aldi is featured with high efficiency
of operation and management based on the cost-reduction principle. All Aldi’s stores in the
world are characterized by simple design and decoration thus to minimize the cost. Aldi’s costsaving
method is reflected through the followings:
Compared to Wal-Mart, generally each Aldi store occupies only 750 square meters which can
greatly cut down the rent and expenses of water and electricity consumption.
Limited number of good-quality products for selling in the stores to save the expenses of
shelves. A typical Aldi store only sells about 700 products which is less but able to satisfy the
dairy necessities (Pradhan, 2010). The grocery structure saves the logistic cost greatly and
enables Aldi the absolute advantages of negotiating to suppliers with respect to the quality
control and price.
Employee strategy: Aldi usually employs four or five employee for one store compared 15
employees at a standard supermarket. Although Aldi pays more to its employees but it have
eventually reduced the employee cost.
Simple promotion method: compared to Wal-Mart or Carrefour, Aldi never does advertising or
public relations. Aldi holds the view of saving the cost for benefiting the customers because all
the expenses related to the PR or marketing are all paid by customers.
Aldi’s business strategy is also based on the customers-orientation concept. Aldi focuses the
needs of customers and pay much attention to develop customers’ loyalty. Aldi considers from