Page 96 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 4: Retailing Structure

Since opening its first store in 1913, Aldi has established itself as a reputable retailer Notes
operating in international markets including Germany, Australia and the U.S. Aldi has
over 7,000 stores worldwide. What distinguishes Aldi from its competitors is its competitive
pricing strategy without reducing the quality of its products. In fact, in some cases Aldi’s
products are 30% cheaper than those offered by its competitors. Aldi can do this because
the business operates so efficiently.

Aldi's
Business Objectives

Investing profits Developing
back into the business lean thinking
Marketing Aldi
more efficient

Efficiency
Efficiency is the relationship between inputs and corresponding outputs. For Aldi operating
efficiently involves reducing costs in all areas of the business. Some of the key areas where
Aldi is able to minimise costs are by saving time, space, effort and energy. Aldi’s approach
to doing this is to run its business around the principles of lean thinking.

Aldi has a no-nonsense approach to running its business. Whereas other food retailers
have elaborate displays, additional services and promotions that draw customers into the
business, Aldi’s core purpose is to ‘provide value and quality to our customers by being
fair and efficient in all we do’ . Everything Aldi does is focused around giving its customers
value for money. Through being efficient and cutting costs Aldi can then invest profits
back into the business. They can then be used to further meet its business objectives for
growth.
Efficiency is not something that is achieved overnight. Lean thinking is a continuous
process that constantly enables Aldi to improve the way in which it meets its business
objectives. This enables Aldi to develop an ambitious investment programme to develop
new properties and suppliers as well as to provide benefits for employees.

Lean Production
Lean production is quite simply about getting more from less. The aim of lean production
is to reduce the quantity of resources used in providing goods and services for consumers.
At the same time, it is about making the organisation more efficient. Lean production
involves eliminating waste and therefore using less labour, materials, space and time.
This in turn reduces costs.

However, for Aldi, lean production is not just about reducing costs for the business. It is
also about passing these savings on to its customers to offer value for money. Lean
production is based on a number of efficiency concepts, such as: Contd...

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