Emsell, 2011).
Price, Place and Product strategies
The business philosophy of Aldi is to focus on indispensable investments and avoid the superfluous in order to give the customers maximum possible savings. According to Rudolph et al (2012, p-142), " Aldi's cost only add 13% to the procurement price, 2% each for logistics, rental, overheads and marketing plus about 5% for staff." Instead of extending its opening hours like other competitors in the UK, all Aldi stores function limited opening hours, which recently extended to 12 hours ( from 8am to 8pm). In contrast, many other competitor stores are available for shopping for 24 hours, 7 days and 365 days which seems an apparent strategic intention. One cannot see the add on services at any Aldi store, for example lottery terminals, children's play area, photo booths, lavatory, dry cleaning services, currency exchanges, news agent, tobacco counters on entry and exit, a separate customer service counter or a coffee shop. The simple reason being that these facilities have its cost which would add up to the end cost to the customer (Emsell, 2011). In a typical Aldi store, one can also observe three to seven employees to run the entire functioning of the store which is a different strategy to other supermarkets which have a high staffing level to provide high standards of customer service. The firm can achieve a low payroll to sales turnover ratio with such staffing level which can help the lower the prices.
According to The Times 100 Business case studies (2010), the key idea that makes Aldi's approach work is the concept of limited assortment. The Aldi store size is relatively small in comparison to the rival grocers with an average floor space of between 650 square meters to 1000 square meters. The usual Aldi store has a common layout with only four shopping aisles also the packaging and displaying products strategy at Aldi is cost effective. However the stores generally have a free parking space which attracts customers significantly. The case study further mentions that while selecting a location for store, Aldi takes in to consideration the population of the area which should be more then 30,000. Also the stores are always at the very good visibility from a main road and with good public transport connectivity.
The sales philosophy of Aldi is very different to other leading grocers in the UK. As the branded products have less operating profit, Aldi has taken an approach to sell products which are equivalent to brands (Wood, 2011). A typical large Tesco or Sainsbury's store stocks around 50,000 product lines, of which 50 per cent are their own brands (Voberda et al., 2011). The success key for any business is to attract the buyer which certainly depends largely on a competitive pricing. Being a discount retail chain, competitive pricing is at the core of Aldi's philosophy. Aldi works on economies of scale. In simpler terms it means, buying products in large quantities so it gives leverage for bargaining for the best possible price which allows Aldi to sell at the most competitive prices.
Currently every week Aldi comes with a different range of products on a Thursday for example bathroom accessories, garden furniture, kitchen and other household equipment. These products are different to the usual grocery items in the stores in terms of its availa
