CASE: ALDI & LIDL

Presented by:
Group 5
Aakash Agarwal
Avijit
Madhumanti Banerjee
Ratnesh
Tejas Patil
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
BACKGROUND OF ALDI
• Founded by brothers Karl and Theo Albrecht in 1946
• Aldi comprises Aldi Nord & Aldi Süd
• Over 10,000 stores in 20 countries.
• An estimated combined turnover of more than €50 billion.
• Aldi stores are no-frills hard discount stores.
• Many of its products are own brands.
• In addition to its standard assortment, Aldi has weekly special offers
• Aldi has a policy in Germany of not advertising, apart from a weekly newsletter
of special prices called "Aldi informs“
• Subsidiaries and joint ventures : Aldi Talk, Aldi Liquor, Diskont.
BACKGROUND OF LIDL
• A German global discount supermarket chain
• It belongs to Dieter Schwarz, who also owns the store chains Handelshof
and hypermarket Kaufland.
• Operates over 10,000 stores across Europe and the United States
• Like fellow German supermarket Aldi, Lidl has a zero waste, no-frills, pass the
savings to the consumer approach
• Staffing is minimal.
• Like Aldi, Lidl has special weekly offers, and its stock of non-food items often
changes with time.
• Other services : Lidl Movie, Lidl launched bakeries in their stores across
Europe, Lidl UK also launched an online photo service.
GLOBAL PRESENCE OF ALDI AND LIDL
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
 FUTURE OF GROCERY MARKET
Expected value of the world’s largest grocery markets for 2022
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
WHY INDIA?
• Sixth largest global grocery market
• Economic liberalization and demographic profile stands out among other
developing countries
• Fifth largest global destination in retail space
• India has high market potential, low economic risk, and moderate political risk.
• Ranks eleventh in market potential (after United States, China, UK, etc.)
• Ranks third in net retail sales
• Highest growth in personal disposable income among other emerging markets
35% DISTRIBUTION OF GROCERY MARKET
ACROSS INDIAN REGIONS 29.6%
30%

25% 24.4%

22.0%
20.4%
20%

15%

10%

5% 3.6%

0%
North-East East West South North

Share of grocery market

Source: India Food Forum; MOSPI (NSSO), Statista 2018

DISTRIBUTION OF GROCERY RETAIL MARKET IN
INDIA, BY TYPE
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
 SWOT
ANALYSIS ALDI & LIDL

S
• Affordable
W O
• Low margins
• Poor customer
• Emerging
markets
T
• Poor economy
• International
pricing service • International competition
• Quality • Poor expansion • Mature market
products penetration in • Financial • Government
• Low operating high income Leverage Regulations

OPPORTUNITIES
costs group • Penetrate • Low quality
• Global • Regarded as a further into image
presence store for European • Increased
• Economies of
STRENGTHS

cheap and market focus on low

scale low quality income group

WEAKNESSES
• Customer • Price war

THREATS
items
loyalty with other
brands
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
Political Economical

PEST

Social Technological
POLITICAL
100% FDI for online grocery market in India allowed in 2016

Ease of doing business in India score has increased now from the time when
Carrefour exited India(142 in 2014 to 100 in 2017).

Germany is considered India's "largest trading partner in Europe," according

to the Indian Foreign Ministry.

Bilateral trade hit €17.42 billion ($21.44 billion) in 2016.

PM visit to Germany in G20 summit

ECONOMIC
The retail market size grew from USD 518 billion in 2012 to about USD 672
billion as of 2016, registering a CAGR of ~7% during the period.

Growth rate of retail industry is at 12% in the last two years.

In the year FY16, 62% of the country’s total spending was on Food & grocery
and Clothing & footwear .

Even with a declining share ‘Food, Grocery and Beverages’ segment

remained the largest spending head.
SOCIAL
Improved mobility

Increased disposable income

Increased urbanization

Existence of both aspirational groups and reference groups of consumers.

TECHNOLOGICAL

The online grocery market in India is projected to grow at a CAGR of 55%

during 2016 - 2021. (Tech sci Research Report)

The E-Commerce Market in India is expected to quadruple to $70 Billion, by

2020. The thin line between online and offline shopping is also about to fade
out. (BCG Report)

Retail Sector in India is clearly poised to become one of the largest

beneficiaries of the disruptive era that has begun. (Deloitte Report)
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
 PORTER’S 5 FORCES ANALYSIS

Threat of new Bargaining power Bargaining power Industry rivalry: Threat of

entrants: Low of buyers: High of suppliers: Low High substitute: High
•Government •Buyer to supplier •High density of •Foreign Retailers •Options available
policies ratio small suppliers •Walmart to customers
•Economies of •large purchase •Small production •Tesco •Low switching
scale volume volumes cost
•Local Retailers
•Distribution •Backward •Forward •Same products
•Big Bazar
channel integration by integration by available at
challenges •Hyper city
buyers suppliers different retail
•Domestic stores
unorganized
retailer
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
 MARKET ENTRY STRATEGY

• Greenfield Investments
• Acquisitions
Foreign Subsidiary Maintain status quo with respect to business model
Risky due to non-existence in Asian country
Risk Avoidance Culture of Germans

• Joint Venture
Strategy changes with time/situation
International Based on the target market and technological
advancements, entry into e-grocery is a future option
Cooperation Grofer, Bigbasket already existing in e-grocery
market,can be helped with offline support.
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
 MARKET
SEGMENTATION
• Demographic: low-mid
income group
• Geographic: Urban and
Suburban
• Psychographic: Not
concerned with product
range or after sales service
• Behavioral: Customers who
prefer quality products at a
cheaper price and not
concerned about brands
TABLE OF CONTENTS
• Background of Aldi & Lidl
• Future growth of the global grocery market
• Choice of Market
 Why India?
 SWOT Analysis
 PEST Analysis
 Porter’s 5 forces Analysis

• Market Entry Strategy

• Market Segmentation
• Recommendations
 RECOMMENDATIONS
• Prefer offline grocery store as per the current business model, and slowly move into
online stores later(as most of the online grocery business in India has failed due to
logistics)
• Aldi has moved into online grocery business in China, Lidl being a competitor has
the scope of moving into online business in India.
• Grofers has about 31.5% market share in e-grocery market of India, followed by
35% of BigBasket. Hence, we can make a joint venture with them and give them
support for offline discounted store.
• Label some products as German to target premium product buyers and some
products as Indians to attract “value for money” buyers.
• For some of the products like pickles/spices which will be completely different
according to Indian taste, go for Private labeling.
• For offline stores, do not restrict into remote areas of this country, as cost of setup in
city would not be very high for India.
REFERENCES
• https://www.techsciresearch.com/news/806-online-grocery-market-in-
india-to-grow-at-55-through-2021.html
• https://www.socialbeat.in/blog/retail-2020-trends-in-india/
• https://www2.deloitte.com/content/dam/Deloitte/in/Documents/CIP/in-
cip-disruptions-in-retail-noexp.pdf
• https://www.ibef.org/industry/retail-india/showcase/reliance-fresh
THANK YOU