Two efficiency-driven networks on a collision course: ALDI’s innovative grocery business model vs Walmart

Abstract

Purpose

This case study of the strategy of the U.S. grocery chain, ALDI, shows how businesses can use a systematic process to develop and iteratively refine the core strategy powering their business model.”

Design/methodology/approach

The case describes how ALDI, the upstart entrant established a foothold, a strategy stumble by Walmart, the market leader, provided the newcomer with an attractive opportunity to expand its competitive reach into more upscale neighborhoods.

Findings

Aldi is continuing to build a business model that allowes it to price its products at an order of magnitude below other grocers and also develop a reputation for private label quality that has ultimately enabled it to challenge leading discount grocers.

Social implications

Some analysts expect a significant number of supermarket war casualties–more grocery store bankruptcies and liquidations over the next few years.

Originality/value

ALDI has begun a campaign to offer its customers more value at even lower prices. Other foreign entrants sense their moment has arrived to leap into the fray now that giant Walmart finally seems open to attack. Amazon is experimenting with grocery selling. Recent chain store news headlines tell the breaking story: “Supermarket Wars!”

Citation

Chatterjee, S. (2017), "Two efficiency-driven networks on a collision course: ALDI’s innovative grocery business model vs Walmart", Strategy & Leadership, Vol. 45 No. 5, pp. 18-25. https://doi.org/10.1108/SL-06-2017-0057