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Contestability - Why Aldi Is a Threat to Supermarkets

Graham Watson

10th November 2023

The Wall Street Journal has looked at the rise of Aldi in the US, highlighting the ways that the German discounter has become the fastest growing chain.

You should hopefully be aware of its strengths: a narrow product range, a real focus on reducing costs and offering value for money, particularly Aldi's ability to leverage private label brands. The flipside of this is that Aldi's reputation for cleanliness isn't on a par with other stores.

Aldi is a multinational grocery store chain with a fascinating history:

  • The company was founded by two German brothers, Karl and Theo Albrecht, who opened their first store in the 1940s.
  • They started as a small corner store in Germany, and quickly expanded their business by offering low-cost products and efficient operations.
  • Aldi made a name for itself by selling a limited selection of private label products at low prices, keeping costs down by avoiding fancy store layouts and packaging.
  • The brothers eventually split the company into two divisions, with each brother taking control of one division.
  • Aldi has since become a global powerhouse in the grocery industry, with over 10,000 stores in 20 countries, including the United States, where it's known for its competitive prices and high-quality products.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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