Introduction
Overview
Aldi is a global supermarket chain based in Germany (Aldi, 2013). Aldi was founded by Karl and Theo albretch brothers in 1946. The two had inherited a convenient store from their mother and created a chain of discount food shops Aldi first went global by opening a branch in Birmingham, United Kingdom. Currently, the supermarket chain owns more than 400 stores in the UK alone.
Aldi mainly deals in food and drinks, but also sells a range of health and cosmetic products and other low-cost domestic goods. The majority of the products sold by this supermarket chain are own-branded labelled plus a few non-branded products. This system enables Aldi to stock a variety of products similar to other general supermarkets but on a limited space (Aldi Group History, 2010; Fallon, 1987, p. 33; Mitchell, 1991, p. 5).
Report Purpose
The aim of this report is to carry out an in-depth analysis of Aldi supermarket chain using PESTEL framework and to explore the potential impact of each factor on Aldi, its policies and competitiveness in the UK market.
Aldi’s Industrial Analysis: PESTEL framework
Political Factors
Aldi is a multinational corporation and therefore is greatly affected by the political and legal conditions of individual countries where it operates. The political state of affairs in the UK can be described as steady. The main focus of the current government is recovery from the global financial crisis (Hamilton & Ryan, 2012).
According to the UK legislation on employment, retail stores are encouraged to provide a wide range of employment opportunities (Balchin, 1994, p. 44). Aldi supermarket chain recognizes the impact of retail chains on social welfare. The company has employed a large number of people without discrimination. Its workforce encompasses people of all walks of life (Mitchell, 1991, p. 5).
Economic factors
The economy of the UK is at the moment steady. However, the country has been grappling with relatively high unemployment and uncertainties in the economy. The economy grew by 0.23 % in 2012 and is expected to grow by 1 % this year (2013) (Hamilton & Ryan, 2012; BCC, 2012, P. 10).
The economic conditions in the UK are a major cause of concern for the retail chain. One of the major causes of concern is the anticipated increase in the unemployment rate. This will result in a decline in the effective demand for numerous products and therefore will affect the general demand of goods in the country (Elearn Training Co 2005). Since the economic factors are way beyond the company’s control, Aldi has started re-organizing its marketing mix with regard to future changes in the economy.
Socio-cultural factors
According to the recent census conducted in the UK, the population of the youth is shrinking while that of the elderly is growing. This will negatively affect the labour market, market demand, and increase in government expenditure services. Ultimately, the UK government will have to cut-down its budget and increase tax to provide these services. Increased expenses due to rising taxes have impelled UK consumers to change their consumption behaviour (Graiser & Scott, p. 10).
These changes have resulted into more focus on value addition (Graiser & Scott, p. 10; Clarke, Bennison & Pal, 1997, p. 60). Since consumers are a function of social habit and beliefs, UK consumers have become more enlightened on health matters and their mind-set towards foodstuff. Aldi is currently adjusting its products to take care of the rising demand for organic and healthy foodstuff (Graiser & Scott, p. 13).
Technological factors
Consumers require more expedient technologies while buying goods. Technology plays a major role in improving consumer experience (Faucheux & Nicolaï, 1998, p. 243). The most recent technological innovations for retail stores include electronic advertising and electronic shelf labelling. Online marketing has also become more popular. For that reason, businesses have resorted to the use of online channels to attract customers (Faucheux & Nicolaï, 1998, p. 244).
The developments of many Aldi goods have been influenced by technology. The current technology has benefited both the retail chain and the consumers at large. Aldi has enhanced consumer satisfaction through technology. The use of technology has enabled the supermarket chain to enhance accessibility of goods and services and personalization of shopping. Technology has also helped to improve efficiency of supply and stock operations (Aldi, 2013).
Environmental factors
Corporate social responsibility significantly contributes in building consumer trust and loyalty. Therefore, many companies have been experiencing a lot of pressure to recognize their obligation to the general public (Schwartz & Carroll, 2003, p. 504; Worthington & Brotton, 2009).
One of the societal matter threatening retail chains dealing in foodstuff is environmental concerns which requires them to act in an environmentally friendly manner. Understanding these issues broadens moral stance. Aldi’s CSR is concerned with the manner through which the organization meets its responsibility to the shareholders via regulations and governance (Faucheux & Nicolaï, 1998, p. 246). Aldi has adapted its products with the current policies and regulations related to environmental sustainability (Aldi Group History, 2010).
Legislative factors
The British market is extremely regulated (Mintel Report, 2011, P. 2). In addition, the EU commission has set up mandatory nutritional regulations for the retail sector. These regulations help ensure that consumers access healthy foodstuff and more balanced diet. These policies and regulations have had a significant effect on Aldi’s performance. Its product meets both local and global standards (Mintel Report, 2011, P. 4).
Conclusion
Aldi is a global company but strongly depends on the UK market. Though the UK is economically stable, it is faced with various uncertainties. Aldi understands its role in the society and has been striving to meet the demand of both the consumer and the government.
Aldi has been able to keep a good rapport with the UK government by implementing politically correct policies. The company has been keeping tab with current socioeconomic changes by adjusting its products and services in accordance with the prevailing trends. In addition, Aldi’s products are environmentally friendly and meet the established standards.
References
Aldi 2013, Welcome to Aldi. Web.
Aldi Group History 2010, Company History. Web.
Balchin, A 1994, ‘Part-time workers in the multiple retail sector: small change from employment protection legislation’, Employee Relations, vol. 16, no. 15, pp. 43-57.
BCC 2012, Policy Marker: Quarterly Economic Survey Q1 2012, British Chamber of Commerce, London.
Clarke, I, Bennison, D, & Pal, J 1997, ‘Towards a contemporary perspective of retail location’, International Journal of Retail & Distribution Management, vol. 25, no. 2, pp.59-69.
Elearn Training Co 2005, The Business Environment, Elsevier, London.
Worthington, A, & Brotton, C 2009, The Business Environment, FT/Prentice Hall, London.
Fallon, J 1987, ‘Aldi’s European Stores Offer Price’. Supermarket News, 31 August, p. 33.
Faucheux S, & Nicolaï I 1998, ‘Environmental technological change and governance in sustainable development policy’, Ecological Economics, vol. 27, pp. 243-256.
Graiser, A, & Scott, T 2004, ‘Understanding the dynamics of the supermarket sector’, The Secured Lender, vol. 60, no. 6, pp.10-14.
Hamilton, S, & Ryan, J 2012, U.K. Economy Surges 1% as Britain Exits Recession. Web.
Mintel Report 2011, UK Food Retailing. Web.
Mitchell, A 1991, ‘Aldi and Gateway Seal Site Deal in Move that Puzzles Supermarkets’. Marketing, 12 December, p. 5.
Schwartz, M S, & Carroll, AB 2003, ‘Corporate Social Responsibility: A Three-Domain Approach’, Business Ethics Quarterly, vol. 13, no. 4, pp.503–530.