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Diversity in European

Retailing

08.12.2014

By Jana Nováková, Shanna Bank, Lucie Pospíšilová, Julia Maurer

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Case introduction

Food retailing industry

Snapshot ALDI

ALDI in Romania

ALDI in the UK

Internationalization strategy CountryLife

Snapshot

Business model

Recommended internationalization strategy

Adaption vs. standardization zones

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Agenda

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Customized models for each community

Create unique shopping experience

Differentiation from competitors necessary

Staff, technology, services, advertising etc.

Positioning

i.e. ALDI target customers who want to save money

BUT also offers private labels

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Food Retailing Industry

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20

40

60

80

100

120

Retail revenue 2012 (US$bn)

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

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Snapshot ALDI

9,600 stores in 18 countries (2013)

Albrecht Discount ALDI

World‘s largest operator in discount channel

Revenue €75 billion worldwide (2013)

Limited assortment, focused on most needed and most

often used products

In-store costs kept at minimum

„We buy the best for less, so you can

too...“

https://www.youtube.com/watch?v=8

sf8NiJPWzY

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ALDI in Romania

Was it a good idea of ALDI to enter

Romania?

Market entry learnings transferred from

the UK to Romania

Recommendations for local adaptions to

taste and shopping habits

Evalutaion of ALDI‘s approach to enter

the Romanian market

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Yes... Wave of Eastern European store openings: Slovenia (2005),

Hungary (2007), Poland (2008)

No competition of local discounters

Lidl&Plus started its aggressive expansion towards CEE

Sales growth decreased from 2000-2004 for Aldi

Romania in EU since 2007

Financial crisis started in 2008, good possibility for „hard-discounters“

In CEE: Romania is the largest country , #2 in terms of populationsize, Bucharest is biggest city

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Was it a good idea of ALDI to enter

Romania?

07.2007: First market entry by 100% subsidiary in Bucharest

controlled by Austrian based subsidiary Hofer

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

...and No

Low GDP per capita and shrinking population

High property prices

ALDI as a „laggard“ and less aggressive

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Was it a good idea of ALDI to enter

Romania?

07.2007: First market entry by 100% subsidiary in Bucharest

controlled by Austrian based subsidiary Hofer

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

2005

Plus

Tengelmann Group

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Was it a good idea of ALDI to enter

Romania?

ALDI is a “laggard” and less aggressive

1995 2011

1995

Mega Image

Delhaize Group

1996

Metro

Metro AG

1999

Billa

REWE Group

2000

Profi

Delhaize Group2001

Penny Markt XXL /

Selgros

REWE Group

2001

Carrefour

Carrefour Group

2005

Kaufland

Schwarz Gruppe

2005

Penny Markt

REWE Group

2006

Real

Metro AG

2006

Auchan

Mulliez Group

2011

Lidl

Schwarz Gruppe

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Repositioning plan (2005):

Investment £1.5 billion

50 new stores annually over next 4/5 years

Product range expanded 700 1050 products

Advertisement:

TV add “Spend a Little, Live a Lot”

Incredible quality and unbeatable value

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Market entry learnings transferred

from the UK to Romania

Result:

> 3% of British grocery market

7th out of 96 retailers in the UK’s

biggest survey of high street shops

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Store size/type: Proximity stores with smaller area

Low prices, very price sensitive

Assortment:

Local suppliers preferred

Private labels appreciated

Local adaption

“Natural”, home made-like products

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Romania: Local tastes and

shopping habits

Mămăligă Compot Plăcintă

Local wine

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ALDI in the UK

ALDI‘s shift from glocal to multinational

strategy: The right decision?

How ALDI was repositioned in the UK

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Internationalization approach

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Glocal Orientation

Domestic Market Orientation Multinational Orientation

Be

ne

fits

from

Inte

gra

tion

Local Responsiveness

Global Orientation

Standardization

Adaptation

Homogenous markets

EtnocentricUnified

Economies of scale

Diverse formats

Heterogenous markets

Moderate adaptation

Think global, act local

Positioning

Pricing

Logistics

Layout

Logistics

Pricing

PricingNew brands

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

From Glocal to Multinational

Aldi’s Business Model

Low rent

Stacked on pallets, in boxes

Layout suits logistics

Limited assortment

Low-cost media

Newsletter „Aldi informs“

Aldi in the UK

City center, eco-friendly

Fresh, Grab-and-go food

Easy layout, lower shelves

Premium private brands

Professional publicity agency

Online press center

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Internationalization strategy change

Loss of unifiedcompany image

Mode different products, different

store image, different target

customer

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Occuring problems:

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Internationalization strategy change

More complicatedsupply chain

More products(700 1050) and more different types (healthy, cosmetics, ready-to-eat)

Higher costsSeveral marketing

campaigns in the UK and redesign of stores

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Occuring problems:

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Discussion time

ALDI‘s shift from glocal to multinational

strategy: What do you think? The right

decision?

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Internationalization

strategy

Snapshot CountryLife

Business Model

Recommended Internationalization

Strategy

Adaption vs. standardization zones

How the Czech food retailer

CountryLife should venture abroad

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Founded 1991 in Prague, first bio groceries store in CZE by Otakar Jiranek

Eco-center, Eco-farm, Bio-bakery

No. 1 importer of bio-products – more than 2000 in portfolio

Groceries

Fruits and vegetables

Pastry

Cosmetics

Detergents

4 stores in Prague

More than 150 employees

Introducing bio-groceries to schools

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Snapshot CountryLife

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

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Business Model

To inspire people with balanced and socially responsible lifestyle.

NEWSTART concept

Covering the whole food chain

Ecological responsibility

Mission

Target group

Core business

Differentiation from thecompetition

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

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Recommended internationalization

strategy

Vienna

Health consciousness(9. healthiest

country)

Geographicalproximity

Income

Culturalsimilarity

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

Internationalization approach

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Glocal Orientation

Domestic Market Orientation Multinational Orientation

Be

ne

fits

from

Inte

gra

tion

Local Responsiveness

Global Orientation

Pricing: higher

Moderate adaptation: language, assortment

Think global, act local

Layout: similar style

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Case introduction

ALDI in Romania

ALDI in theUK

Interna-tionalization

Strategy

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Standardization vs. adaption zones

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Thanks for your

attentionQ&A

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Backup

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http://www.foodanddrinkeurope.com/Retail/Falling-domestic-sales-force-Aldi-into-Eastern-Europe?utm_source=copyright&utm_medium=OnSite&utm_campaign=copyright

http://www.fruitnet.com/eurofruit/article/9656/lidl-branches-out-in-eastern-europe

http://en.wikipedia.org/wiki/List_of_supermarket_chains_in_Romania

http://fructidor.com/newsdetail.aspx?idn=13412

http://www.techbusiness.me/files/aldivslidl.pdf

http://hbr.org/2009/12/dont-be-undersold/ar/1

http://www.wall-street.ro/articol/Companii/31941/Meciul-dintre-discounterii-Aldi-si-Lidl-se-muta-in-arena-romaneasca.html

http://mpra.ub.uni-muenchen.de/40361/1/25-The_economic_crisis_an_opportunity_for_retailers_in_Romania.pdf

http://www.countrylife.cz/

http://www.forbes.com/2008/04/07/health-world-countries-forbeslife-cx_avd_0408health_slide_16.html

http://www.eufic.org/article/en/expid/Fruit-vegetable-consumption-Europe/

http://www.oecdbetterlifeindex.org/countries/hungary/

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References