<p align="justify">Albrecht Discounts also known as Aldi is a retail giant based in Germany with operations all over the globe. The German biggest retailer, Aldi, is divided into North and South sections on the basis of operations. The idea was incepted in 1913, and it came to the UK in 1990. Currently, it is operating a chain of more than 500 stores. It is in line with many other retailing giants of the country and is facing severe competition. Its strategy is cost leadership with the focus on giving the greatest worth of money to its customers. It sells grocery, stationery, and everyday inexpensive household items (Carreno &; Almartmy, 2011). It does not have a minimum purchase policy, allowing customers to shop at will.</p>
<p align="justify">Following is a detailed Porter Five Forces Model Analysis of Aldi:
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<h2 align="justify">Competitive Rivalry – High</h2>
<p align="justify">The competition in the retail industry is fierce with all the players offering almost everything at almost the same price as the other players in the industry. Woolworth, Coles, and Wal-mart are some of the competitors of Aldi. All of them focus on cost. The price comparison is a very routine activity and a difference of even a few cents is highlighted by competitors. Market campaigns are aggressive with attempts to snatch market share from the rivals. The advertising and marketing costs increase but the prices of the products are still kept low. Aldi operates on a principle of minimizing fixed costs just like all of its competitors. Thus, the overall competitive rivalry for Aldi is very high.
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<h2 align="justify">Threat of New Entrants – Medium</h2>
<p align="justify">The requirement of large establishment and capital investment raises the entry barriers in this industry. Opening a new store, establishing the brand, reaching economy of scales of stock requires time and investment. Small players often end up victims of mergers and acquisitions. However, low-cost local supermarkets or a local farmer selling his home-grown fresh products such as vegetables, eggs can take up Aldi’s market share in a small or a medium sized town (Skordili, 2013). This will decrease the sales and profits of Aldi. Therefore, the threat of new entrant is medium for Aldi.
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<h2 align="justify">Bargaining Power of Suppliers – Low</h2>
<p align="justify">The retail industry is full of suppliers ready to supply the same products at the same or even less than the current market price to giant retailers such as Aldi. These retailers usually then push these suppliers to provide discounts and favorable terms. There is no switching cost. Suppliers are always on the lookout for retailers with the largest of orders and are more than happy to provide them with discounts. Therefore, the suppliers are in no position to attempt to influence the market prices of products or force these retailers to sell at higher prices. Thus, the suppliers of products to Aldi do not have much bargaining power over the retail giant.
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<h2 align="justify">Bargaining Power of Buyers – High</h2>
<p align="justify">The retail store industry in which Aldi operates revolves around selling products at the least of the cost with each player attempting to further reduce prices of the products. This gives great bargaining power to the buyer. Most of these stores are located close to the proximity of each other; therefore a consumer does not have to put in much effort to switch from one seller to the other. A number of stores offer loyalty scheme offering further discounts to returning customers. Aldi does not have this offer (Sandberg, 2013). Therefore, Aldi is no position to raise prices or attempt to influence the market prices of the products. The buyers, thus, have very high bargaining power over Aldi.
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<h2 align="justify">Threat of Substitutes – High</h2>
<p align="justify">The products sold by Aldi are not unique. All the other giant retailers and local supermarkets also sell the exact same products. Most of these are products are of brands that are also sold everywhere. Also, the others players of the industry lay great stress on advertising, marketing, and price reductions, substitution is very easy. Products sold by Aldi can be brought from any other retail store easily. Thus, the threat of substitution for Aldi is high.</p>
<h2 align="justify">References</h2>
<p align="left">Carreno, C. &; Almartmy, H., 2011. Strategic HRM Report. [Online] Available at: <a href="https://shitijtyagi.files.wordpress.com/2014/06/aldi_final_report.pdf">https://shitijtyagi.files.wordpress.com/2014/06/aldi_final_report.pdf</a> [Accessed 16 June 2017].<br />
Sandberg, E., 2013. Understanding logistics-based competition in retail; a business model approach. International Journal of Retail and Distribution Management, 41(3), pp.176-88.<br />
Skordili, S., 2013. The Sjourn of Aldi in Greece. Journal of Business and Retail Management Research, 8(1).</p>
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