Case 2.

3
Aldi and Lidl: International Expansion of Two
German Grocery Discounters1

ambition is to sell q,uality products at the lowest

price possible. To realise profits in spite of the low
prices, grocery discounters reduce their costs to a
minimum and attempt to generate high volumes of
sales through a limited product range of fast-moving
items. This cost reduction approach especially affects
spending on store design, customer service and
advertising: grocery discounters try to save money
by building up their stores in suburban areas and
remote districts, where rental fees or purchase prices
for properties and buildings are low. Furthermore, all
companies have a basic outlet format similar to that
of a warehouse, with merchandise sold straight from
©Eric Glenn/Shutterstock cardboard boxes. In the stores, customers have only
limited possibilities to contact service personnel in
the case of product-related q,uestions since there is
It's the best business model for reta,il no dedicated customer service department. And with
in the world. regard to advertising, grocery discounters usually
Philippe Suchet, food industry consultant, do not launch costly TV ads or image campaigns -
BNP Paribas often using only flyers and newspaper ads as promo­
tional material.
With a worldwide annual sales volume of €3. 7 trillion
in 2007 and an average annual sales growth of 2. 7 per With regard to the grocery discount concept,
cent during the past 10 years, the grocery retailing experts distinguish between so-called 'hard' and 'soft'
industry can be considered as one of the world's key discounters: today, the product range of a hard
economic sectors. Over the past decades, grocery dis­ discounter covers some 800 items and almost all of
counters such as Aldi and Lidl have strengthened their these are store brands. The product range of a soft
position in the grocery retailing industry, especially discounter, however, covers a range of 2,500-3,000
in Germany and Europe. With their no-frills approach, goods and includes store brands as well as
they have led to significant changes in the industry branded products.
and have challenged many companies that operate
other store formats, such as supermarkets and hyper­
markets. In this context, a Financial Times report
Development of grocery
on international retailing noted in 1995: 'The spread discount stores in Germany
of the discount format has been particularly disrup­ Having taken over their parents' grocery business
tive to Europe's grocery retail industry and has driven
retai lers to examine cross-border markets.' Exhibit 1 some years before, in the early 1960s Karl and Theo
illustrates the leading grocery retailing companies in Albrecht opened the first Aldi grocery discount
the World and on a European level, as of 2007. stores in Germany (under the name Aldi = Albrecht
Discount). At that time, many industry experts q,ues­
tioned the potential success of the hard discounter's
The grocery discount format business model. However, within a few years, the two
brothers built up several hundred stores in Germany
;h_e _key terms describing a grocery discounter are and started their international expansion in Europe.
� alism' and 'efficiency', which are integrated They confounded the experts, and proved that
to a l busine
l ss areas. In fact, grocery discounters' their new store format was highly competitive and
 ou nters I nternational expa n sion of Aldi and Lidl 483
Expa nsio n of T wo Germ an Groc ery Disc
482 Case 2.3 Aldi and Lid l : I ntern ation al

- - - - 1. try t o i dentify and target new customer segments Additionally , Karl was responsible for the market

7
within their home market Germany , and/or entries in the anglophone countries such as Australia,
, wor ld and Europe , 200 7
EXHIBI T 1: Lead ing g r ocer y r eta i l i ng comp ani e s
{ -
2. c ontinue their gro wth through expansion in for­ Ireland, the UK and the USA.
European top 10 groce ry retail ers 2007
World wide top 10 grocery retailers 200 7 European
eign markets. In 2007 Aldi operated more than 8,500 stores in
Home Worldwide Position Company Home
Position Company country sales volume The two leading gro cery discounters in Germany 1 5 countries and generated sales revenues of about
country sales volume €47bn worldwide. Further statistics show that about
(€bn) (Aldi an d Lidl) started their international expansion
(€bn) 52 per cent of the worldwide sales can be assigned to
well in advance of any other c o mpetitor. Today , both
1 Walmar t USA [3_8 7 .6 1 Car refour France 83 .4
Aldi and Lidl generate more than 40 per cent of their Germany, 31 per cent were generated in other

I
1

2 Metro Germany 6 7 .4 European markets and 17 per cent were achieved out­
- ---<

Car r efour Fr anc e 103 .2 revenues in foreign markets. Furthermore, the two
2
3 Metro Germany 7 4.8 3 Tesco UK 66. 1
l belong to the top 10 companies of the pan-European side Europe.

I 4
5
T esco
T h e Krog e r
UK
USA
7 3.3
53.8
4
5
Schwarz 2
R EWE
Auchan
_____j
Germany
Germ any
Fr ance
51.9
48.4
39 .3
1
\ and wo rldwide foo d retailing industry , and are
regar ded as the world's largest fo o d discounters by
sales v olume (see als o Exhibit 1).
Lidl's history
Schwarz3 Ger many 51.9 6 In 1973, 11 years after the Albrecht brothers opened
6
7 Aldi Germany 39.0 their first Aldi stores, Dieter Schwarz established
Se ven & I Japan 5 1. 1
7 1 Aldi's history
8 Edeka Germany 38.8 the grocery discount retailer Lidl in Ludwigshafen,

l
50 .9

- �J
8 Co stco USA
E. Leclerc L Fr ance 33. 7 The concept of Aldi was born in 1946 when Karl and Germany . Similarly to Karl and Theo Albrecht,
Targ et USA 50 . 5
\ 9 t
ITM Fr ance 31.0 The o Albrecht took o ver their parents' grocery busi­ Schwarz had worked in a small family-owned retail
Aldi G e rmany 4 7 .1 1: business before he launched his own discount retailer
t 10 ness. At that time, they faced a severe shortage of
goods and groceries in p ost- w ar Germany. As a result, business. Today, Lidl Stiftung GmbH & Co KG is part of
the brothers were forced to narrow the product range Unternehmens-gruppe Schwarz, a group of three inde­
f mar­ in th eir stores. Even in the 1950s, when the German pendent companies: Lidl, Kaufland and Mega Cent.
successful. Based on the national and international past years, they now increasin gly face signs _o
and stagn ating gr o wth in thell' home economy again prospered, they did not decide to mod­ At first sight, it seems that Dieter Schwarz has suc­
success of Aldi, the German grocery discount indus�r y ke t satur ation
ters in ify their pro duct offerings. It was in the early 1960s
became an impor tant segment within the worldwide market. The mark e t share of grocery discoun cessfully copied Aldi's business model for his own
that they realised that this limited product range was
grocer y retailing indus tr y . By 2007 Germany w s the Germany is at a le vel of about 40 pe r cent and e �p grocery discount stores. However, a closer look reveals
erts

� in uncha ng m the no disadv antage for them at all. Karl and Theo found
home base of six maj or grocer y disco unters, w ith an assume that this figure will rema that Lidl follows a so-called 'soft' discount strategy
out that their stores were highly profitable and they
ed

ov ides a detail ed illust ra­ where the product assortment in the stores is enlarged
annual sales volume of more than €50bn in Germany coming y ears. Exhibit 2 pr
distributio n in the Germ an saw no need to implement the characteristic store to almost 3,000 items and customers are offered branded
and more than € 100bn on a worldwide level. tion of sales v olume
. concept of a supermarket, where shoppers could products as well as store brands. Statistics show
retailing indus tr y
choose from a wide range of goods. Dieter Brandes,
To day , howe ver, the success stories of the six As a result, German grocer y disco unters have to
that Lidl's soft discount concept has been expanded suc­
any a former Aldi manager, states that the bro thers ini­
major grocer y disco unters originati g fr?m Germ ad just their strategies in order to fuel fur ther grow th.
cessfully: in 2007 Lidl operated about 7,900 stores in
n

we able tially planned to convert their grocery stores into

are being j eopardised: while the comp ames � The y face t wo ke y options for the future. They can:
2 1 countries and generated sales of about €36bn on a
e
the typical supermarkets before they noticed that their
to expand their market share in Germany dunng worldwide level; 40 per cent of the sales were achieved
minimalis tic business model was highly successful. in Germany and 60 per cent in European markets.
Brandes describes the hands -on mentality at Aldi by Exhibit 3 presents a comparison of Aldi's and Lidl's key
- - claiming that the company did not set any financial tar­ operating figures in 2007.
,,,,- �
- - - - - gets: 'They have no budgets, no annual plans. Why on
- - - - - - - � - - a s o ' 2007
n y 's g ·oce ry ,eta , i n g i n d u stry O\:J store fo r rT ' �t (
r EXH I BI T 2 : Sa les volu me o str· b:... t, o n i n Ge r ,..,..a ear th do they need them? Budgets are just toys for top Nevertheless, today Lidl is still number two behind
tota �a es vo '... 'le €136 . � o n ) managers. Budgets are one of the big money wasters.' its rival Aldi with regard to sales volume and number
\ of stores in Germany and on a worldwide level.
In 196 1 the two bro thers split their company into Howe ver, on a European level, the company has
H y pe r ma rkets two separate organisa tions. According to their agree­
43 .2% already taken the lead with regard to number of stores.

I ment, Theo Albrecht was resp onsible for the northern

part of Germany and founded Aldi Nord GmbH & Co
OHG, based in Essen, Germany . Kart Albrecht took I nte rn ational expansion of Aldi
I the lead for the southern part of Germany and es tab­
lished Aldi Siid GmbH & Co OHG, based in Miilheim, and Lid l
Germany . Today , both companies operate indepen­ Aldi realised early on that international expansion could
dently , except on s trategic decisions such as price be a key lever in enhancing the company's growth.
\ G roce ry
discou n te rs promotions and purchasing conditions, where they In 1967 the management decided to enter Austria by
40 . 5% consult each other. 4 During all market entries in for­ acq_uiring local grocery retailer Hofer. Then, from
eign co untries, the company followed the initial terri­ 1976 to 2006, Aldi entered another 13 foreign markets.
torial agreement from 1961. So Theo Albrecht focused Ho wever, its expansion plans were not limited to Europe:
his expansion on the north-eastern, western and 10 years after the market entry in Austria, Aldi began to
Supe r ma rkets a nd other stores (such as groce ry depa rt me nts i n pet rol statio ns, health food shops and kiosks), with a south-western countries in Europe. Karl Albrecht con­ make gains in the US market and, in 2000, the grocery
sales a rea <100 sq_ m, a re not i ncluded _1 n this ove rview. centrated on the southern and south-eastern regions. discounter extended its operations into Australia.
_ _
 Ada p ta tio n to loca l needs 485
s
2_ 3 Aldi and Lidl: International Ex pansion of Two Germ y
C
a e a n G r o c e r Di s c ou n t e r
4

l
s
8 4 l l, h t c o mpanies pu rsued different
L idl 's r apid exp ansion int o Po land se em s t o have c o un tr y v e w o
e t lle
h l
paid o ff: in 2007 the company a ch i eved sales of abou st rategie s a s w i Lidl ope ned up many stores
g t ei : w t e
e t h same time Ald i e nte red fo r
i n er s , 2 �
- - 7
Hl � T 3: Comparison of Aldi' s and Lidl' s key operat fig
u €759m and w as r anked am ong the t op three groc ery in di f e r en t r
go n s a , ­
I f ts
e
EX d l e ful

7
L- � - - c ly a nd slo wly : i bega n to

- -i
r ��- - - - - - � ld i discoun ers i n the c ountry . With this well-e sta li s he e ig n m a r ke mo
- t b d r e a r t
i t ri
A 3 ng o ne regio n a fte r a nothe r .
== = positio n , L idl has a c lear a dv a n tag e over it s rival , b uild u p st o r e s by e n e
o r
d m pl e , the
-
- - Ald i, which entere d the Pol ish mar ket i n 2008 In Sw i z t e rl , f e g roce ry discou nte
Foun ding year a n s t ill a n r x a
- - - � � � - - - - - - � scount � �i _s c _ _ u - nt - d n peaking region
d 2 i o
u st star ted op e ra t io n s i th e Ge rman- s
I
- -
- = } a n
d
� h a
s to b uil d c o ns um e r tr a n d m a r k e t s h a r e . Oi ts di t r i t s foll o s
Busines s mod e l H -
35, q h c w ed su ccess i v e
ly .
r s .
4 7 •1 S om e of Ald i's an d Li dl ' s ma rket e ntr i s were fi t t e r s
Sa les vo lume (€ b n) in 2
0 07 3 4_ 3 (40% - e a
(52 o/c ) )
}2 4 •

I
0 \ r esult of simple trial and er ro r : oft en th e g rocer y
Ada pta ti o
21 . 6 (6
to
- th ereo f G erm an y
loca
1
needs
7 o/c)
0 0%)
( 3 re tail ers declined supp ort fro m mar n
l
4 • _ ket r esearch co m ­
i 1
- there of Eur ope a n fore g n m ar e t s
k k 0. 0 (0%)_ _ _ _ pa nies or management consultant s, a nd ju dged t h
8• ( ) e Lidl d cid d t o implemen t thei r groce
a r e t s 1 1 7 o/c 0 r y dis ­
\ - t h ereo f non- Eu r o e a n
p f o r e ig nm 1 7 , 87 q at t ra ctiveness of a foreign m arket on t he basis of t h eir A ldi a n d e e

I
8 4 t nl y i n the i r ho m e countr y but in
5 own man agers' g ut feel i ng . In 20 0 8 Lid l w as force d t c ou n t s tr a e gie s n o t o
Number of stor e s in 2 007 - - - 4, 2 8 % 2,q o 2 (37% ) - o
k e ts
e
. Never theles s, bot h compa ­
[i
,
2 4 q ) realise the de fects of th is strate g y: after fo ur years o a ll he ir for ig n m a r
( f t
- th ereo f Germ any % 4, q77 l m
na g e s t o adapt th e product rang
2 , 3 (63 ) l
% ( 3 5 ) %
a r
uns ati sfactory sa les, the c om pa ny retr ea ted f r om t ni e s all o w o c a e
ign markets h e ac
- there of Euro p e an fore
r d in try - p ecifi c d em and s. I n a n attemp

I
k t 1 ,35 ( 16%) o (0%)_ _ _ Norw egia n market and sold it s 50 stores to local c om ­ co g t o c o u n s t
1
m r 0

J
_ thereof non-Eur opea
n fo reig n a e s _ _ pe tito r R ema. Norw ay's uniq,u e ge ographic stru c tur to inc r ea s e c on s um a c eptanc e, Ald i, for exampl e ,
e e r c
p ro duc s n Switz erlan d s
k et s in 200 7 1 1 a n d th e d istrib ution of its p opulat ion w er e key facto r s r e ab e lle d it s G e rm a n t i o
Number of for eign mar - -
( 00%) l
�6%) _ __ I 2
� that l ed to Lidl's failure. T he th inl y spr ead pop ulati o
e
rl y G e rm - brande d it em s becam e Swi s s ­
n that fo rm a n
_ h e re of E u r o pe a n
e a r ek t s O (O%) � d h
es usual ly do no
t f o r i gn m densi ty in N or wa y req,u ire b ra n ded g o s . I n t e US A Al d i st or
4 _ _ d Lidl to build s everal ce n ­ o t
- th e r e o f n o - u ro e t r od uc ts at a ll On y th e famo
n E p e a n f o r ig n m a r k e s � % ) t r al w areh o u se s in o rd er t o ens ur e smo oth supp li s sel l a ny Ge r m an p . l u s
e r t ll
J for eac h disc ou nt sto re in the co untr y. C o nseq,uen tl G e rman Ch is ts o e n an d almond pas te a re offere d
il A ld ,
e i - y Christm se a so n n th e U K Li dl offe
comp e t it o r had previo usly been pr es e n t "'.h
. il to r
logistics becam e m ore expensive an d the addition d u rin g t e
h a s . r s
U li k e Ald i Lid l limi ted it s e xp ansion p lans to th e a l I
a s we ll: a b o ut 90 p er c e nt of
d t o wa fo r a r e ta s e c t o
in m ost cases - preferr e
n i t s c osts threaten ed the pro fit ability of L i d l ' s store s . reg io n a l p ro du c ts i t s
G rma n m r k�t fir st. The r eaf er, in the pe riod fro m an lt i fr o m t he U K a nd Irela nd an
t far m ore adv n tu uro d d
e a ma ture, Lid l ha s been Wern er Everts en, hea d of Lidl Norw ay, exp ai n ed t me a t a n po u ry s d ,
wi t h rk
e l h a t
1989 t 2007 the c o mpany e nter e 21 fo reign m arke
ts lo t s of t he fru it a nd ve getabl es a
d pan s i o n m a e t
o t op e a n e x th e s tores wer e closed be c au se t he y o ff e red no fu r ­ in s e aso n ,
a d im pr s � ed expe rts w it h it s as on ishing rate o f began it s Eastern Eur s t s w he n
Li d l UK di r c o r Mar in Bailie ex
r e
e b 4 illu e th e plain s : 'It '
d 002. Ex h a t
entry into Pol a n
n in 2 i i t r the r devel o pmen t pote ntial, and he indi c a e d th a Brit h. e t s
i nte rn ti o nalisat ion . Additio na ll y , Lidl seized � e Aldi t t i s ll t
h m t c dl , a s w e ll E uro b u yin g ; we ha ve to lo ok at wh
a ti o
n r k s en e o f a n d L i st ore locat ion w as a key iss ue, which sho u ld ha o
n t a p a n
- e
p a n
e e o
i n t e rn a a l a e p r e v e a t
r
o ppo r u
t ni t y t o e xp
a n d t o a
n d
u m e o f
k ts
d l p no
v h re m g as the number of stores in each countr y. been ch ecked mo re care fully: ' It ca n simp y be a c a s e n
in b U Kc us t o m e r s w a t .'
e l
v
a n d d e e l o p e m a r e w
E u r o pea n m a r k e ts of wron g
or oo low po pula t i o n d ensi t .
l ocatio n t fi t s i ht thi s c u stomer foc us see ms to o
t y s c
A r g , n ­
Of c ours e , we wa nt to be w here the pop ul a ti on s t d ery disc ount conce
i .' d a r d is e g r o c p .
fl ic t w i t h th e s a n t
l i ce a"d number of st '2.001
In add iti on t o the se mistakes , Lidl Nor way had t
o A ld i d L i dl realis ed tha t t his adaptat
d ' s m �rK H o we v er , a n i o n
il B IT 4 : A l d i' s a n d L , E:
d n h elp
c ope wi th a hi gh level of tu rnove r am ong its top m a n ­ c a h e g ro c ry disc ount ers
to l oc al n e e s t t o
age r s. One of th e count ry m anagers l ef t he comp a n
e
t e l e ign mark e
t . In Switzer la n d
y s uc ces s f ully d ev o p a for
2 0 months after he si gned his e m ployment c ont ra c t . h K e e
a nd n t e U
, h A ldi fac e d s iff competit i n
i w r t o
il
The freq,ue nt changes i n Lidl' s t op man agem e nt a n
d f r o m lo c al r e ta e r s , the comp an y de par ted fr o m
i t s
the resu lting unc ertainty among e mplo y ees a s o ro h d di o u nt c on c ept and launched adv
l r ig o a r ­
u s s c e r
a ffe ct e d th e l ong-te rm e o ­ i o d er to c onvi nce cu stom er
s t r at e g ic p la n n i n
o f t h
m tis n g c a mpa i g n s n s t o
g c i r
n e . a t A l di . An Aldi spok espe r son expla in
a a s the b e n ­
p a n y in g a ti v e w y s h op
f th d rtis i g camp a gn : ' The a cti vity
o
e f its e a
v
e n i h a s
pro ve d v y s u e fu l an d is an import ant p ar
e r c c s s t o f
s a q, ua l ity m ai nstre a m su per m
our o s i ti on i g
r ­
Differ e n ce s in t h
p n a a
e w i h d is c u t p ropo s i t on .' In addi ion to
i ket a o n i t t h e
s r
t
n e s
e gi
a dv e tit i g c mp
in te rn a ti o n a l t g
mi at i
, st or e s in Switzerl and an
s

s n a d i n
g k e n d w it h a
r a
K s t broa der s elec ion
t he U e o c o f
o A ld i a nd Li
wd r e t
f f o d pr odu c ts m ore ups cale fro
d l
a
m e s ea o , z e n
t a n
n
'fo od t o g o' cou nter G e or ge Wal l
e . ,e
Aldi's in ernatio alisa tion pat t rn is ch ara cteri d m e a ls a n da n e w a c
t s e t na
by p ha ses of 'ac tion and 'recovery . In t h e past r e t a il p e rt Ma ge m ent Ho riz on s Euro p ,
' e e x wh a e
d
' t h ldi ha d to ad j us t i ts pro duct a ss
- = n u m b e r o f A l i s to re s
co mp any e tere d one or more ma ket s wit hin a s o rt e xpla i ns y A o r t ­
D : number of U dl st ore s n r h K i n o d e to o ve rc om e its re puta tio
Period of tim e and t h en paused i t s m a rket r y m e n t i n t he U r r n o f

)
(1) In the USA 2q5 o es a r e
f 1 ,1 q o A l d i s tor e n t d
s - discou n ter ': 'In Germ a ny, ch
ed b y th e g r oc er y r e ta il re T ra e r
o pe r a t
a tivi ies for about 10 year s. Since 2 000 A ldi has a c c
d
l b e i ng a n 'u n e r cl s e a p
J o 'e s . c t e­ a
e u
(2) I
n Aus tria and Slov e n ia all 443 A l dl
e rate d its internationa lis a ti o n pro ces s an d ent e r e q,u a t e s t o v al . Y a lways hear the w ord 'b ill i g '
st ed o
or es a r e l a be ll ed H o fe r . b i g uu d a nd it m e an s v alu e By cont
about o ne new marke t per year . Lidl, in co n trast , c ts ( c he a p) e n s e , . ra st ,
a ic
ma t on U K lo w a r e n ot nec ess arily eq ,u ated
tnuch fast er: al thou gh t he c omp any s tar ted its i n t e r­
t
R e ference d ate f or all da a and Infor i in t h e p r e s wi t h
Is en d of 2007 . d re o ten ass oci
nati o n alis ation q,u ite late, in 1989 , it e ntered 20 f o r e v al u e a n a r e m o a t ed wi t h
i gn f
gro cery departments in petro stations, health food sh ops s s a
a t a o t or s (
t c ha s l a n d k io k ) w ti h
r e e po o r u a t
h r s u n o d tw e n a n d . n a
S u p e
r m rk e s n d e a s e
t _ tn a k ts i t h e p e ri b e 19 9 2 2 0 0 7 O q, li y .'
r i c u d e t o e e .
s a le s a re a < 1 0 0 s q_ m e n o n l d 1n h is v rv i w
486 case 2.3 Aldi and Lidl: International Expansion of Two German Grocery Discounters
Notes 487

Further expansion of Aldi to see whether the grocery retailers will implement
these strategies in other foreign markets as well. ◄
and Lidl The next market entries could serve as an indicator
• 'Retailing in Germany - Discounters Dominate Germ
for the strategic course of the two rivals: in 2008 Aldi any', Retail Week, 30 June 2000.
Aldi's and Lldl's success in their home market of • 'European Discount Retailing Uncovered', European
opened its first stores in Poland, Hungary and Greece. Retail Digest, 22 June 2003.
Germany is beyond dispute. However, both com­
In the following years the grocery discounter intends • 'Inside Aldi', www.thegrocer.co.uk, 29 November 2003
panies realised that if they stuck to their original .
to expand its operations to Croatia, Romania and the • 'Quality Ads Stay On', www.thegrocer.co.uk, 11 Febru
discount format, they might have limited growth pros­ ary 2006.
Czech Republic. In the medium term, Aldi plans to
pects abroad. With their altered product and service • 'Paul Foley: The Retail Boss Who Says He Can Save
enter Turkey, Russia, New Zealand and South Africa. You tl'f30 a Week' ' www• guardian • co • uk '
strategies in the UK and in Switzerland, Lidl and Aldi 11 July 2008.
It seems as if Lidl intends to continue its rapid inter­
are trying to meet the req,uirements of their demand­ • 'The Germans are Coming', The Economist, 16 Augus
nationalisation as well: in 2008 the company entered t 2008.
ing local customers. While Aldi managers retain their
Malta and Cyprus. In spring 2009 the first stores in • 'All Smiles at Aldi', www.thegrocer.co.uk, 1 September
pricing strategy also in those countries where Aldi 2008.
Switzerland were opened. In the medium term, Lldl • 'A Lidl Goes a Long Way', Retail Week, q October 2008.
heads upmarket, Lidl has slightly increased the sales
plans to conq,uer Brazil, Mexico, Russia and the USA.
price of some of its products. It will be interesting • 'Nielsen Universen 2008 - Handel und Verbraucher in
Deutschland' ' www• nielsen • de 14
October 2008. '
• 'Aldi and Lidl Head Upmarket in Britain', Business Week,
21 October 2008.
• 'Aldi Group - Retailing - Germany', www.euromonitor.c
om, 17 March 2009.
QUESTIONS • 'Lidl & Schwarz Group - Retailing - Germany', www.e
uromonitor.com, 17 March 2009.
1 While Aldi and Lidl entered some foreign markets via acq_uisitions (see, for instance, the • Aldi website: www.aldi.com
acq_uisition of Hofer by Aldi in Austria in 1967), they mostly opt for greenfield investments. • Lidl website: www.lidl.com
Discuss the reasons why Aldi and Lidl are choosing greenfield investments as a primary market • Planet Retail website: www.planetretail.net
entry strategy.
2 In an attempt to change its image as an 'underclass-discounter' in the UK and Switzerland, Aldi
enlarged its product range and offered a higher level of service to customers. What could be
the rationales behind such a strategy in the UK and Switzerland? Do you also see problems NOTES
and risks associated with this approach?
1 A more ?om r�hensive version of this case is available in
3 In some trade journals experts characterise the internationalisation process of Lidl as 'fast' and � German, published under the title 'Die
'pushing', whereas the internationalisation of Aldi is described as a 'slow' and 'well-considered' lnternat1onalis1erung von Aldi und Lidl - Moglichkeiten und
.. Grenzen bei der Obertragung von im Inland
process. Do you agree with the experts? Identify reasons for the 'fast' and 'pushing' erfolgre1chen Geschaftsmodellen auf as Ausland', Workin
_ � _ g Paper No 46, ESCP-EAP European School
internationalisation of Lidl, and for the 'slow' and 'well-considered' internationalisation of Aldi. of Management, June 2009. This version contains an extensive list of references and further
_ readings
1n English as well as in German.
4 Until 2009 Lidl restricted its internationalisation to countries within Europe. Aldi, in contrast,
2 About 69 per cent of Schwarz's sales can be assigned to
decided to open stores in Europe, Australia and the US A. What are the advantages and _ Lidl (€35.9bn). Hence, on a worldwide basis
disadvantages of Aldi's strategy? Which strategy would you recommend to Lidl in terms of its Lrdl would be ranked 19th and on a European basis it would
be ranked 9th.
geographical presence over the next five years? 3 A?out 69 per cent of Schwarz's sales can be assigned to
Lidl (€35.9bn). Hence on a worldwide basis
L1dl would be ranked 19th, while on a European basis it would
be ranked 9th.
4 In this case study, there will be no further distinction betwee
_ n Aldi Nord and Aldi Sud. Both entities are
considered as one company.

FURTHER READING
This cas� was written by Stefan Schmid, Tobias Dauth, Thomas Kotulla and Sebastian Baldermann, ESCP Europe, Cam­
• E. Colla, 'International Expansion and Strategies of Grocery Discount Retailers: The Winning pus Berim, Heubnerweg 6, Berlin, 14059, Germany.
Models', International Journal of Retail & Distribution Management, 2003, 31(1), 55-66.
© Schmid/Dauth/Kotulla/Baldermann (2020). The material in the case has been drawn from a variety of published
• J. Dawson, 'Retailing at Century End: Some Challenges for Management and Research', sources.
International Review of Retail, Distribution and Customer Research, 2000, 10(2), 119-48.
• S. Schmid, T. Dauth and T. Kotulla, 'Die lnternationalisierung von Aldi und Lidl - Moglichkeiten
und Grenzen bei der Obertragung von im Inland Erfolgreichen Geschaftsmodellen auf das
Ausland', Working Paper No 46, ESCP-EAP European School of Management, June 2009. Ghauri, P. & Cateora, P. (2022). International Marketing (5th ed.). McGraw Hill.
• M. Wortmann, 'Aldi and the German Model: Structural Change in German Grocery Retailing and
the Success of Grocery Discounters', Competition & Change, 2004, 8(4), 425-41.
• 'World-class Retailer - Aldi Builds on Value Formula', Retail Week, 24 March 2000.
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