Aldi Draft

Market structure

There are many sellers in this industry, but the few important ones are Tesco (28.7%) market share, Asda (17.5%), Sainsbury (17%) and Morrison (11.1%). Aldi owns the majority of market share in Germany whereas it has 4.3% in UK (Grocerynews, 2014). Other lead competitors of Aldi are, Lidl (3.2%), Tengelman’s Netto (18%), Norma (11%) and Penny (4%) (Forbes, 2013).

Incase of market power, the firms in this industry have very little power to change the prices because they sell homogenous products that are available worldwide. For example, if a company increases the price of a particular product, then they might lose their customers to their competitors who sell it for lower prices.

The supermarkets these days indulge themselves in the production process and sell it under their own brand names, hence they are consolidated. Appleton farm’s, Sundae shoppe, Sea queen etc. are few brands owned and operated by Aldi (Aldi, 2014).

Supermarkets are a part of oligopolistic market and they are interdependent on each other when it comes to many things like prices, demand and supply etc. (Economicsonline). For example, since Aldi is a discount store and sell products at lower prices, its competitors are forced to decrease the prices as well or else they may lose all their customers.

Since Aldi and its competitors sell homogenous commodities like sugar, wheat, cotton etc. they come under the price takers category because they sell their products at prices that are established in the market since there is extremely high competition (Bized, 2001).

The access to information these days has become so easy with the advancement of technology. Aldi provides various information about its products on it website regarding the prices, the brand, the quality of the product, information regarding the latest offers, the weekly specials etc. (Aldi, 2014).