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SWOT Analysis of ΑLDI

Aldi is a German supermarket chain,  founded in 1913, which has been steadily rising on the leaderboard on the supermarket market. The family business started with basic products like eggs, flour, water and colza oil; gradually introducing new products such as alcohol and sweets. The private company employs over 120k people worldwide,  of which over 35k are in Germany alone.

SWOT analysis on Aldi shows its: 

  1. Strengths 
  2. Weaknesses 
  3. Opportunities 
  4. Threats 

SWOT analysis is of assistance when assessing unknown situations. Many large supermarkets have similar problems, the question is whether or not Aldi’s is the same or if there is something that makes this company different. Below is a detailed SWOT analysis of the company.

Strengths 

  • Scale of business – Aldi has a revenue of over 100 million euros. It allows for a big loan and a better price from its suppliers. For example, Aldi ordered 10 million units of jam in 2010 at a unit price of 1 euro; but paid only 0.8 euros per unit because of its 20 million jars of jam order in 2020. 
  • Diversification of location – It is located in over 1800 places in the USA, over 600 places in the UK and it even has some shops in China. Aldi understands it has to place importance on trade expansion. 
  • High market share – Aldi’s turnover was ranked 7th in the world in the retail chain market. 
  • Family business – the owner of this company is the Albrecht’s family. We know that stock owners can rock the boat in a company so being strong and stable is very important nowadays. 
  • Strong brand – Aldi’s logo is one of the most popular logos in Germany. Strong brand and brand identification draw customers to shopping.

The scale of business, diversification of location, high market share, family business and strong brand are all crucial in this shopping generation. There are also 3 other strengths of Aldi that are remarkable:

  • Keen prices 
  • Good deals for customers  
  • High quality of products

Weaknesses 

  • Lack of a self-service checkout – many Aldi shops don’t have a self-service checkout. COVID-19 and the growing introversion of people are leading more and more people to seek out shops where they can complete the shopping process more independently. This means that Aldi desperately needs to evolve its checkout method.
  • Job dissatisfaction – “There is no life-work balance” and “There is a lot of overtime and they don’t pay for it” are some of the negative comments that can be found on Aldi’s website. There is nothing to worry about because every major company is liable to receive such comments as it’s hard to please everyone. However, it is a very important factor that should be included in the SWOT analysis.

Job dissatisfaction is key in big companies. Without  good workers, the company doesn’t exist. The image above shows some of the comments concerning Aldi that can be found on Glassdoor. Aldi, with a 3.6 star average, is outperformed by Tesco’s 3.8 star average. Although it is not necessarily a bad rating, Aldi would benefit from imitating Amazon by investing more in its HR department.

Opportunities 

  • Door-drop(e)-commerce – The pandemic has shown us that consumer habits can change rapidly and businesses should be prepared for the market turmoil. Aldi has a big opportunity to benefit from this.  
  • Aldi’s franchise opportunities – a big opportunity for Aldi is to become a franchise. They have the know-how and a strong brand so its present state is perfect for a franchise. 
  • Grants from the EU – The European Union gives a very large grant for innovation, and Aldi could take advantage of it.
  • Stock market – Tesco is one of Aldi’s competitors and it is financed by investors on the stock market. Going public would up its cash flow and allow for investing in new locations and innovations. 

Threats

  • Law – the strong monopolist law in the European Union can be a threat for Aldi. Google is the best example of how the penalty from the European Union can be painful for the wallet. The last 5 years for Google have been crazy and have reduced its profitability. Over 4 billion euro was committed for the EU from Google’s budget just these past years, and it will not stop there. Aldi is unlikely to become a monopoly, so this penalty will likely never matter for it, but a monopoly is definitely is possible and hence worth noting.Strong competition – Lidl is one of the biggest retail shops in the world and Aldi’s main competitor in the german market. Auchan, Tesco, Carrefour, Costco, and Spar are other retail companies which have a similar budget for marketing, and investing in  new locations. Everyone wants to be number one but only one can be. Remember that many of these companies have a plan for e-commerce and it may be a game changer. 
Jakub Borowiec
Jakub Borowiec
Financial markets enthusiast. I studied management at the University of Economics in Wroclaw.
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