Strategic Analysis of Aldi

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What are the trends in the Australian Food Industry?
The trend within the Australian food industry seems to attempt to be competitive price-wise. Furthermore, expanded their industry to other sectors including petrol, merchandise and liquor. The food industry looks to what people want and stocks it accordingly. By branching out, those in the food industry are able to cover more segments and increase their profitability in a wider sense. Aldi’s competitive environment in Australia consists of 5 firms, the two major competitor being Woolworths and Coles. Woolworths has positioned itself as the ‘The Fresh Food People’, aiming to provide a wide range of fresh produce in addition to dry groceries and other merchandise. Many farmers in Australia grow their products exclusively for Woolworths, adhering to strict quality, food hygiene and safety standards. The ‘Fresh Food People’ strategy has been an important way of differentiating themselves from major competitors, such as Coles. Woolworths actively advertises through magazines, newspapers, television and distributed leaflets, aiming to project an image of providing fresh, healthy and high quality products at a reasonable price. Similar to Woolworths, Coles also is a full-service supermarket, offering fresh produce, dry groceries and other merchandise. Its strategy, however, is less succinct than Woolworths ‘Fresh Food People’ strategy. In March 2002, Coles announced a major restructuring program, aiming to cut costs by improving its supply chain management, implementing changes to its information technology, and trying to achieve better synergies with the other segments in the Coles Myer Corporation. The supply chain changes include restructuring its distribution centre network and simplifying operations and processes in its stores and distribution centres. In addition, Coles planned to improve its loyalty programs. In addition to the major national chains Woolworths and Coles Myer, there are also a number of smaller regional players in the Australian food retail industry, namely Action supermarkets (owned by Foodland Associated), IGA and Franklins

Foodland’s second division is its franchise and supply segment. Foodland is a grocery wholesaler to Western Australian independent supermarket operators including its own franchise banner groups. Foodland also operates three Cash & Carry branches and ‘Foodlink’, Western Australia’s largest food service operator, supplying caterers, hotels, restaurants, cafes, institutions, 18 schools and mine sites. Foodland’s main strategies are to satisfy changing consumer demands by combining innovation with value and to reduce costs through greater efficiency and better use of technology.

IGA is another supermarket with a regional presence in Australia. It has a market share of about 13.5 percent47. IGA stands for ‘Independent Grocers of Australia’ and was brought to Australia by Davids Holdings in 1988. All IGA stores are independently owned and operated. The IGA network unites formerly independent retailers that traded under many different names under one brand. This has led to better economies of scale and scope, better buying power and consistency in marketing, merchandising, information technology, and store design.

The third regional player in the Australian retail industry is Franklins, a discount supermarket chain, which was founded in 1941 by Frank Lindstrom. Franklins’ strategy concentrates on providing value for money, quality, friendly service, speedy checkouts and a good overall shopping experience53. Like all the other supermarkets, Franklins also aims to improve supply value chain management and update administration systems.

The above discussion has shown the competitive environment in which Aldi operates. It is characterised by two major national chains, Woolworths and Coles, both full-service supermarkets that are trying to...
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