Introduction
Aldi also known as “Albrecht Discount” is a discount supermarket chain based in Germany that operates in a globalized environment all around UK. It entered the UK market in the 1990s and now currently operates over 9,000 stores worldwide (Wallop, 2013). Aldi uses a business model that gives its consumers an opportunity to save money whilst purchasing healthy foods at reasonably cheap price, especially during a period of temporary economic decline. Aldi focuses on delivering a simple and basic money shopping experience, therefore coming up with the slogan “spend a little, live a lot” (Naslund, 2013). In the early months of 2017, Aldi overtook Co-op as the UK’s fifth largest grocer discount supermarket. (Dean, 2017).
The main purpose of this report is to explain how the current, social, technological, environmental and economic factors affect the United Kingdom’s supermarket chain, Aldi. This report will also evaluate how Aldi is affected by political, legal and ethical factors.
Social
The social environment consists of the sum of a society’s beliefs, customs, practices and behaviors. The behavior of an individual could be easily influenced by the dominant cultural values of the society and the social class membership. During the time where the economy is stable and there was no recession, consumers preferred to shop in a habitual way. However, due to a variety of social changes, shoppers now prefer bulk shopping which is one big shop in one supermarket (Wallop, 2017). Due to that, Aldi in UK has increased its production and retail of diverse range of products to change the practices of customers.
Furthermore, Aldi could be met with a degree of social stigma if inflation occurs. Individuals may want to shop at more expensive leading names such as Tesco, Sainsbury’s or Waitrose. Aldi may need to consider other strategies such as offering a 24-hour services to maintain or increase market share. However, because Aldi gives a narrow range of products to choose from, it creates a streamlined shopping experience in which customers who have a time constraint would benefit from this approach as it creates the shopping process quicker.
Technological
Technology is a macro-environmental variable that has majorly influenced the development of Aldi products. The use of technology could be a key component to success in modern businesses. For instance, the technological basic organizational structures and facilities such as intelligent stock management can keep track of Aldi’s productions and manage the supply chain more efficiently. Moreover, Aldi could use the product lifecycle which shows the development of demand of products over time to improve its production quantity suitable to the required amount.
Internet also plays an important role as online and mobile shopping is becoming increasingly popular (Butler, 2015). In this case, Aldi initiated e-commerce and began selling wine online in 2016 although their profits slipped two years before (Tugby, 2013). It enabled them to introduce the Aldi brand and their best selling and quality products to thousands more customers across the UK (Barn, 2016). To increase their profits furthermore, Aldi could enhance other technology led initiatives such as self-checkout or in-store media which could decrease the average time per person during checkouts.
Environmental
The major issue threatening food retailers are the environmental issues. Mismanagement in terms of energy usage and resource extraction endangers life on our planet. Retailers have been pressurized to be responsible and implement more sustainable ways as their low price strategies are affecting the environment as a whole. They have been accused of indulging in unethical practices to drive prices down and not consider about the environment (UNEP,2003). To counteract the accusations, Aldi was said to have joined the National Farmers Union’s (NFU’s) that supports a campaign that reduces the threats to humans and the environment. (ASGC,2017).
Corporate Social Responsibility (CSR) plays an important role in gaining customer’s trust. Aldi’s corporate social responsibility to the environment is that their constantly minimizing their carbon footprint, reducing the impact of their refrigerants, boosting their energy efficiency and recycling their waste. Since 2014, Aldi’s waste production such as plastics and cardboards have been 100% recycled (Aldi, 2016). Plus, acknowledging these facts would provide satisfaction and confidence to the customers when purchasing food, knowing that it is not harmful to the environment.
Economical
The economic environment is the totality of economic factors that influences the consumers purchasing behavior. Economic factors are important to discount supermarkets such as Aldi because the demand and supply, cost prices and profits are likely to be influenced. As the economy shifts into recession due to Brexit, supermarket food costs will likely increase and consumers would then change their buying behavior as a result and prefer cheaper food suppliers such as Aldi (Skordili,2013). This would then be an ideal market for Aldi in the UK and increase its financial stability.
Although one of the most influential economic factors is high unemployment rates, it affects the demand of certain goods, adversely affecting the demand required to produce the goods. Changes in the UK food market is proportional to the demand of goods, therefore affecting Aldi’s production rates. Aldi also gave 3000 employees a pay rise and hence became the highest paying supermarket in the UK. (Rodionova, 2017).