Aldi, the famous discount retailer has gone a long and successful way over the years. The company remember the time when the market was welcomed for newcomers but also times when the market was under pressure. Nowadays the market is not pressured but different, digitalized, abstract. Eventually the time for new restructuring even shifting from physical into virtual is not that far away. (Mandour, 2007; Fullerton & Lovins, 2013) This report has the primary reason to theorize what could be the possible issues if Aldi decides to evolve into online retailer. The examples in the real life are enough but only few shops were able to change the business model successfully. Even it is early to say how successful they are. Therefore this paper evaluates the issues and will suggest solutions that are based on the theoretical fundament and real life outcomes from other similar players.
As it is well known, Aldi success was planted years back in Germany when the brothers Karl and Theo Albrecht inherited their mother’s grocery store. They eventually were successful to convert it into a chain of more than 300 stores when in 1960 split the store into Aldi Nord and Aldi Sud. (Rudick, 2013) The chain grocer wrote 40.6% increase in revenue for 2012 and double the profit at the same year up to 157.9m. (Best, 2013) Market research Company Kantar Worldpanel cited in Reuters announced that in 2012 Aldi’s market share is 3.2% of the UK retail market. (Davey, 2013) While according to market presence and financial power the company is behind TESCO it is a fact that Aldi is expanding by leaps and bones its market share by acquiring 1m new customers on a year basis. (Rudick, 2013b)
Why grocers are going online?
Selling online food products is totally different story then selling not perishable long lasting and unbreakable merchandise. However following the trend consumers seem to be ready to explore this opportunity in order to save time for private use. And the industry has already answered to this demand. More than a decade ago the industry had its first comers, such as Comet that sank but new and better optimized are in the market nowadays such as TESCO. (Comet, 2012). In the UK grocery landscape as the Verdict Research a business intelligence provider predicts for 2013 and 2014 the online food retailers would be among the winners in terms of revenue increase due to convenience and competitive pricing. Fig: ??? below shows an approximate growth of 3.2% for the whole retail industry but according to Capgemini e-Retail Sales Index in 2013 growth for the UK online market was 16% or 11 billion pounds. (CapGemini, 2014)
Figure: ??? – UK online retail expenditures in pound 1998 - 2013e and share of total. (Verdict, 2013)
Estimation is also that older shopper aged 55+ will be fastest growing demographic online consumer rising by 31.9% between 2011 and 2016. If this is going to happen that underpins the importance for convenience when shopping. As a conclusion going online is a trend, but also a rational business choice.
Part I - Aldi’s essential components for effective business operations management for Aldi supermarkets in the UK
Aldi is known for its simple but very competitive operational structure where efficiency is achieved by reducing costs in all areas such as, costs for timely execution, space for operations, delivering quality instead quantity and giving value for money spent by Aldi’s customers. (The Times 100 Busines cases, 2014) The success of Aldi business operation management lies in: efficient operations, establishing and maintaining a high quality/price ratio and goods offered with private labels. The efficient operations are demonstrated by carefully engineered...
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CapGemini. (2014). £91 billion spent online in 2013 - IMRG Capgemini e-Retail Sales Index. Available: http://www.uk.capgemini.com/news/uk-news/ps91-billion-spent-online-in-2013-imrg-capgemini-e-retail-sales-index. Last accessed 02.04.2014.
Comet (2012). Comet stores have now ceased trading. Available: http://storage.comet.co.uk/www/splash/html/splash.html?_ga=1.208202710.570422404.1395469747. Last accessed 01.04.2014
Davey, J (Reuters)
Fullerton, J & Lovins, H. (2013). Transforming Finance and The Regenerative Economy. Available: http://neweconomyweek.org/blog/transforming-finance-and-regenerative-economy. Last accessed 01.04.2014.
Mandour, MA. (2007). Mixed Reality: The Deconstruction of Time -The Restructure of The Future. International Journal of Architectural Research. 1 (2), 77-91.
Rudick, G. (2013a). Aldi: a history of the low-cost supermarket. Available: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10343032/Aldi-a-history-of-the-low-cost-supermarket.html. Last accessed 02.04.2014.
Verdict . (2013). How The UK Will Shop: 2013. Available: http://www.sas.com/offices/europe/uk/downloads/retail/retail-predictions2013.pdf. Last accessed 01.04.2014.
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