ALDI Supermarket Chain (UK)
Aldi supermarket chain posts big rise in pre-tax profit
Aldi, the discount supermarket chain, has posted a big rise in full-year profits as its share of the British grocery market continues to grow.
The company said pre-tax profits rose 65.2% to £260.9m for the year to 31 December 2013.
Group turnover rose 35.7% to £5.27bn over the period.
Its market share grew from 3.1% to 4% in 2013, according to Kantar Worldpanel, and is now 4.8% after a continued strong performance in 2014.
-We keep prices constantly low while keeping product quality consistently high, which is exactly what shoppers want,- said Roman Heini, Aldi's UK group managing director.
-They had become used to thinking you have to pay more for better products. We've shown them this doesn't have to be the case.-
Aldi's low-price strategy has won market share from all of the UK's big four grocers - Tesco, Wal-Mart's Asda, Sainsbury's and Morrisons - forcing them to cut their own prices.
Fellow discounter Lidl has also seen its market share rising strongly to 3.5%, making it the eighth largest supermarket in the UK by sales.
-Consumers are currently benefiting from intense price competition between the grocers. For the first time ever, we've seen the average basket of everyday goods bought today costing exactly the same as it did a year ago,- said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
The prices of some staple groceries, such as vegetables, milk and bread, have even been falling as supermarkets fight for market share.
Aldi said operational cost savings were used to keep prices low rather than boost profit margins - a philosophy that is proving increasingly popular with customers and encouraging the firm to expand further.
It opened 42 new stores in 2013 and is due to open 54 this year, with another 60 to 65 planned for next year. This would take the total number of UK stores to more than 600, the company said.
Matthew Barnes, Aldi group managing director, said: -We're investing over £600m in our operations over the next two years to support this growth.-
Mr Barnes also said that growth in the first half of 2014 had been stronger than in the same period last year.
Aldi's bullish results and comments come in stark contrast to the fortunes of rival Tesco, currently reeling from an accounting scandal and recent boardroom resignations.
While Tesco remains the clear market leader, sales have been falling and its share of the UK grocery market is now down to 28.8%, says Kantar.
Asda performed best in the 12-week period to 14 September, increasing market share to 17.4%.
UK grocery market *
SOURCE: KANTAR WORLDPANEL
* For the 12 weeks to September 2014
Supermarket Percentage market share
Source: BBC Business News, 29th September, 2014.
Aldi sales see 'record growth' at expense of Tesco
Tesco continues to lose out to discounters Aldi and Lidl, research suggests
Discounters Aldi and Lidl are booming at the expense of Tesco and Morrisons, research firm Kantar Worldpanel has said.
Aldi saw a 32% sales growth rate for the 12 weeks to 20 July, said Edward Garner, director at Kantar Worldpanel.
-This is a new record for the retailer and means it has nearly caught up with Waitrose,- he added.
Rival Lidl saw sales grow by almost a fifth, leaving it with a 3.6% market share.
Waitrose saw sales grow by 3.4%, a growth rate -well above the market average- the Kantar research said.
Of the big four supermarkets, Sainsbury's and Asda managed to keep their share of the market, but Tesco's and Morrisons lost out.
Tesco, which has reported lower sales for three successive quarters, saw sales drop by 3.8% in the period, Kantar said.
Earlier this month, the supermarket chain's chief executive Philip Clarke said he would stand down after criticism about his strategy, telling the BBC he felt -enormous relief- about leaving.
However, the giant still leads the market by a wide margin. Tesco holds 28.9% of the market, while its nearest competitor, Asda, has 17% market share after a modest rise in sales.
Sainsbury's held onto 16.6% of the market, but Morrisons saw its share squeezed, with sales falling by 3.8%. The chain's market share decreased to 11%, down from 11.5%.
Tesco, Asda, Sainsbury's, and Morrisons have dominated the UK market for some time.
However, in recent years, discount and high-end supermarkets have challenged the 'big four'.
Source: BBC Business news, 29th July, 2014.
Whilst Aldi’s operational cost savings are the key to its popularity with its customers, sustaining its profits would necessitate further market expansion.
In your role as a Marketing Consultant, you have been approached by Aldi to put together a Marketing Plan to increase its share in the UK market for the next five years.
Marketing Plan (Key areas to cover)
- Executive Summary
- Introduction & Objectives
- Market Situational Analysis, especially the competition
- Target Market/Segmentation
- Marketing Mix Strategy
- Implementation & Control
- Budget/Sales Projections
In terms of the content of the Marketing Plan Report, you will be marked on the degree to which you:
• Demonstrate a thorough understanding of the purpose of the exercise.
• Display knowledge of the planning tools and theories involved and an ability to apply them effectively.
• Demonstrate the ability to select critical points, evaluate them and communicate the conclusions effectively.
In terms of overall presentation, you will be marked on the following:-
• Language (Appropriate Language, Grammar, spelling etc.)
• Presentation (Layout, Style, Quality etc.)
Further Guidance on the Marketing Plan Report
1. Objectives – objectives need to be SMART but it is unnecessary to explain in detail how smart they are.
2. The balance between market analysis and the actual planning/actions– ensure that your submissions are balanced with regards to analysis and planning. For example, do not use a lot of space summarising the analysis, at the expense of setting objectives and planning objective-specific marketing strategies and tactics.
3. Vagueness – planning needs to be very specific; stating that you will use ‘social media’ for promotion because it is the ‘most efficient tool’ is not enough. You need to explain the social media tool (s) – what they are, why you are using them and how you would use them.
4. Academic content – you are expected to apply models, and not just describe or define them. For example, your SWOT or PEST analyses should not read like textbooks in which you explain what SWOT or PEST are – this is essentially incorrect. You needed to apply them and not describe them.
5. Executive summary – an executive summary should be written in a way that allows the executive who reads it to know what the problem is and how it is to be solved. Essentially, it is a summary of your problem statement, objectives and how to achieve them (i.e. how to solve the problem).
6. Secondary data use – Analysis should be supported with secondary data (from the literature). You should demonstrate wider reading and acknowledge the sources of your information, both in the main body and in your bibliography. Avoid making very bold but not substantiated statements, such as ‘the only retailer in the UK’ or ‘massive campaign’ or ‘massive customer segment’. Give numbers if you think the segment is large and compare it to other segments to give an idea of the size of it.
7. Presentation and structure – to achieve an excellent grade, your presentation needs to be immaculate – this includes numbering tables, referencing correctly etc. Do not present a lot of data and information in tables as appendices. Data or statistics that refer directly to your discussion in the main body, should be presented in the main body. Tables and figures – tables and figures need to be numbered and each should have a title that is self-explanatory. Your analytical content must be high, demonstrating critical thinking and the ability to apply relevant marketing concepts (refer to the marking criteria in your handbook).
8. Word limit – although there is no word limit for this work, there is a page limit. Your Marketing Plan Report should be presented in not more than five pages. This will, however, not include your references in the bibliography, the appendices and the cover page. Please, note that your cover page must have your Full Name and ID Number.
Dr. Rosemary Burnley