Aldi and the digital transformation
Our digital transformation report is directed towards the executive management of ALDI B.V. and the board of its parent company ALDI Nord GmbH & Co. KG. It contains a critical assessment of ALDI’s current strategies and position in the industry, with the intention of implementing a new digital strategy.
ALDI has a solid foothold in the discounted segment of the grocery industry, currently making minimal use of information systems such as online sales channels to reach consumers. Online retail is highly competitive, difficult to successfully navigate and setting up an online sales channel and the corresponding distribution can be very costly. Moreover, revenue gained through online sales is only a small portion of the total income for most firms in the industry. Very few competitors are heavily vested in online retail, Albert Heijn being one of the exceptions.
Nevertheless there are opportunities that ALDI can exploit through new information strategies. Current trends clearly show a growing demand from customers for online sales channels, with projections estimating 20-25% of all grocery sales being done online by 2030. Furthermore, customers are demanding a combination of online shopping and pick-up points. Additionally, customers tend to be more price sensitive resulting in online competition being mostly price-based.
Firms that adopt a suitable business model that incorporates the proper IT strategies in time might profit from this potential growth, while those that fail to adjust to the changing market dynamics will have a hard time catching up. ALDI currently has the opportunity to get in on the ground floor. No discount supermarket chain in the Netherlands has yet adopted an online sales channel in their business model, leaving a gap in the market that ALDI can fill.
Benefits for ALDI would not only include revenue gains, but also an early start in getting a feel for online sales and the distribution that comes with it. Knowledge gained early on may prove vital to stay competitive in the coming years as online retail grows and becomes more important.
The strategy most fitting for ALDI is the development of an online sales channel with pickup points at specified locations throughout the country for customer convenience. This allows ALDI to develop a more indepth relationship with its customers, develop appropriate distribution protocols by keeping all operations in-house with a delivery strategy that has been tested and proved successful in the Netherlands. Upon successful implementation of these changes in the business model, additional changes can be made to further enhance the online sales capabilities.
Online grocery retail is a market that still lacks major revenue generation when compared to offline and it is highly price-competitive. Nonetheless, it is growing with increasing speed and firms that wait too long with adjusting to these dynamics may well find themselves in trouble somewhere in the foreseeable future. ALDI has the opportunity to stay ahead of these changes, a chance that should not be wasted.
Blei, V., et al., (2015), “Aldi the new online grocer- a digital transformation proposal towards e-grocery”