SWOT Analysis of Aldi

Summary of Aldi SWOT Analysis

A SWOT Analysis of Aldi reveals the key factors shaping the retailer’s position in the UK market. Aldi’s strengths include rapid sales growth—up 19.8% in a 12-week period compared to just 1.6% for the major competitors—and a rising market share, now at 12%. The brand benefits by offering quality products at lower prices, which strongly appeals to British consumers. Aldi’s reputation grows further through industry awards and the successful opening of new stores to meet demand. These Aldi strengths drive customer loyalty and continued expansion.

However, Aldi faces notable weaknesses. Despite growth, it trails the “big four” supermarkets in market share: Tesco, Sainsbury’s, and Asda maintain larger customer bases. Recent price increases on staple items like milk and bananas have also eroded Aldi’s price advantage, making it only marginally cheaper than competitors. This undermines its core value proposition.

Overall, the Aldi SWOT analysis shows that Aldi can leverages strong growth, value, and reputation. But it must address challenges related to market share and pricing. Aldi’s ability to sustain its strengths and mitigate its weaknesses, in summary, are crucial as competition intensifies and consumer expectations evolve.

Aldi Strengths

• In the 12 weeks coming up to the 21 May, Aldi sales rose by 19.8%. This in comparison to the big four supermarkets of the U.K., Asda, Tesco, Morrisons and Sainsbury’s, whose sales grew collectively by a mere 1.6% (Butler, 2017b).
• The rapid growth of Aldi has seen the organisations combined market share rise to 12% as a result of around 1.1 million additional customers visiting their stores (Butler, 2017b).
• The reputation of Aldi is one of providing comparable quality to the leading brands at notably lower prices than any of the brands competitors, a reputation which according to the chief executive of Aldi UK and Ireland presents a unique offering that resonates in the mind of the British consumer and has resulted in the store opening 70 new stores in 2017 in line with customer demand (Butler, 2017a).
• Aldi is named the best supermarket of the year for the fourth time in 2017 in The Loved By Parents Awards (Aldi, 2017b).

Aldi Weaknesses

• Despite Aldi being a discount retailer, they still had to increase prices of certain products. Namely, basic groceries including milk and bananas, as the fall in the pound hit, detracting from their traditionally cheaper reputation (Butler, 2016). In doing so, Aldi put itself at just 1 pence cheaper than Tesco, Morrisons and Sainsburys for Milk, and the same price as Asda (Butler, 2016).
• While Aldi has experienced high growth in 2017, it is still far behind the big four British supermarkets in terms of market share, with Tesco having a 28% share, Sainsburys a 16% share, Asda a 15.1% share and Morrisons a 10.6% share (Cox, 2017).

Opportunities for Aldi

• Additionally, a number of Aldi products have been named as being the best in the world, or as being superior alternatives to high-end products.
  • One example of this can be seen in an Aldi gin being names as the best in the world by experts, despite costing less than £10 (Becquart, 2017), and another being the Lacura exfoliating masks which beauty bloggers have heralded as being as good as a high-end version costing £39 (Am, 2017).
  • This ultimately presents an opportunity for Aldi to keep developing and expanding such products. In short, they wish to develop and expand its lines selling such products (i.e. its beauty and alcohol ranges).
• Aldi also plans to create 4000 jobs in the UK, as part of its expansion plans amid increasing sales, and aims to increase its number of stores from 700 to 1000 by 2022 (Bury, 2017). One opportunity for Aldi is to adopt a similar strategy to Tesco, by increasing its visibility and place on the high street by opening Express stores, that is smaller stores with the essentials required by consumers.

Threats to Aldi

• After Amazon took over American grocers Whole Foods, the supermarket industry of the U.K is anxious that a takeover of market share by Amazon could occur (The Guardian, 2017). While Whole Foods have only 9 U.K. subsidiaries, supermarkets are wary given that the goal of Amazon is often the global domination of a market, meaning that Aldi could potentially lose some of their market share in the U.K. (The Guardian, 2017).
• Aldi, in fact, is not the only German firm growing and accelerating its market share in the U.K. market. Lidl currently holds a 5% share of the grocery market in the UK, and is expected to overtake Waitrose to become the seventh biggest chain (Butler, 2017b). Moreover, the sale of on label supermarket brands rose by 6% year on year. This as opposed to only a 0.6% rise in branded products. Therefore the current success of Aldi may be compromised by shoppers preferring cheaper alternatives from Lidl.
• Reports from July 2017 indicate that Asda are currently considering a takeover bid on the British discount chain B&M, as an attempt to diversify when faced with increasing competition from cheaper rivals such as Aldi (Topham, 2017). Asda are currently the third-biggest supermarket chain of the UK. As a subsidiary of American supermarket giant Walmart, Asda also possesses experience and funding to navigate the market. Plus the acquisition of 500 B&M stores as an outlet for products could see Asda increase their visibility and market shares, and reduce the sales of Aldi.

References for SWOT Analysis of Aldi

A-C Sources

• Aldi. (2017a) ‘Teaching kids healthy habits.’ [Online] [Accessed on 22 July 2017] https://www.aldi.co.uk/team-gb
• Aldi. (2017b) ‘Welcome to Aldi.’ [Online] [Accessed on 22 July 2017] https://www.aldi.com/?aldiurl=true
• Am, S. (2017) ‘Aldi has released a £7 version of a very popular beauty product.’ Kent Live. [Online] [Accessed on 31 July 2017] https://www.kentlive.news/aldi-has-released-a-7-version-of-a-very-popular-beauty-product/story-30455162-detail/whatson/story.html
• Becquart, C. (2017) ‘A gin from Aldi has been named the best in the world by experts – and it costs less than £10.’ Cornwall Live. [Online] [Accessed on 31 July 2017] https://www.cornwalllive.com/a-gin-from-aldi-has-been-named-the-best-in-the-world-by-experts-and-it-costs-less-than-10/story-30462673-detail/story.html
• Bury, R. (2017) ‘Aldi to create 4000 UK jobs.’ The Telegraph. [Online] [Accessed on 31 July 2017] https://www.telegraph.co.uk/business/2017/07/11/aldi-create-4000-uk-jobs/
• Butler, S. (2016) ‘Aldi and Lidl hike milk and banana prices as pound’s fall bites.’ The Guardian. [Online] [Accessed on 20 July 2017] https://www.theguardian.com/business/2016/nov/22/aldi–lidl-hike-milk-banana-prices-pound
• Butler, S. (2017a) ‘Aldi becomes UK’s fifth largest supermarket.’ The Guardian. [Online] [Accessed on 21 July 2017] https://www.theguardian.com/business/2017/feb/07/aldi-uk-fifth-largest-supermarket
• Butler, S. (2017b) ‘Strong sales growth at Aldi and Lidl takes their market share to 12%.’ The Guardian. [Online] [Accessed on 22 July 2017] https://www.theguardian.com/business/2017/may/31/aldi-lidl-sales-growth-uk-market-share-supermarket-raise-prices
• Card, D. and Krueger, A. B. (2015) Myth and measurement: The new economics of the minimum wage. Princeton: Princeton University Press.
• Corking, G. (2016) ‘EU Referendum: Aldi & Lidl insist it’s ‘business as usual’ after Brexit vote.’ Gazette Live. [Online] [Accessed on 19 July 2017] https://www.gazettelive.co.uk/news/teesside-news/eu-referendum-aldi–lidl-11528999
• Cox, J. (2017) ‘Aldi creates 4000 UK jobs in nationwide expansion.’ Independent. [Online] [Accessed on 19 July 2017] https://www.independent.co.uk/news/business/news/aldi-new-jobs-uk-branches-budget-supermarket-expansion-employees-a7834971.html

D-Z Sources for Aldi SWOT Analysis

• Daily Record. (2017) ‘Aldi supporting the best of Scottish Produce.’ [Online] [Accessed on 26 July 2017] https://www.dailyrecord.co.uk/lifestyle/food-drink/aldi-seasonal-scottish-producers-10797477
• Davies, R. (2017) ‘Aldi to become highest-paying supermarket in UK.’ The Guardian. [Online] [Accessed on 23 July 2017] https://www.theguardian.com/business/2017/jan/05/aldi-to-become-highest-paying-supermarket-in-uk
• Farrell, P. (2016) ‘Aldi and other oregano suppliers promise to turn over new leaf after ACCC investigation.’ The Guardian. [Online] [Accessed on 21 July 2017] https://www.theguardian.com/australia-news/2016/nov/09/aldi-and-other-oregano-suppliers-promise-to-turn-over-new-leaf-after-accc-investigation
• Fleming, P. (2017) ‘Wage hikes at Aldi and Lidl are welcome news. But don’t get too excited.’ The Guardian. [Online] [Accessed on 23 July 2017] https://www.theguardian.com/commentisfree/2017/jan/09/lidl-aldi-national-living-wage-supermarkets
• Orel, F. D. and Kara, A. (2014) ‘Supermarket self-checkout service quality, customer satisfaction, and loyalty: Empirical evidence from an emerging market.’ Journal of Retailing and Consumer Services, 21(2), pp. 118-129.
• Rawlinson, K. (2017) ‘Two men jailed in UK for horsemeat conspiracy.’ The Guardian. [Accessed on 31 July 2017] https://uk.news.yahoo.com/two-men-jailed-uk-horsemeat-155658051.html
• The Guardian. (2017) ‘Whole Foods, then a whole industry? Amazon sinks teeth into supermarkets.’ [Online] [Accessed on 22 July 2017] https://www.theguardian.com/business/2017/jun/18/first-whole-foods-then-whole-industry-amazon-supermarkets
• Topham, G. (2017) ‘Asda considers bid for B&M that would give it access to local stores.’ The Guardian. [Online] [Accessed on 23 July 2017] https://www.theguardian.com/business/2017/jul/23/asda-considers-bid-for-bm-that-would-give-it-access-to-local-stores