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Team Paper #3 – Scenario Analysis
Guilherme Camargo
Feirish Nor Feizal Nor
Filippa Larsson
Isacco Tomelleri
Franco Tradatti
University of Charleston
BUSI-450: Business Strategy
April 6, 2025
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Industry Introduction
The industry covered and researched in this set of papers is the groceries industry. As
stated before it is the biggest retail industry and offers a broad range of products going from food
to medicine, home appliances, etcetera. These goods are sold mainly at supermarket stores, but
also wholesale, e-commerce, local stores and some of them even at gas stations. As persistence
states, “the food & grocery retail market analysis shows a significant growth in recent years. It is
a crucial
sector that tends to daily needs of consumers (Food & Grocery Retail Market Size
& Growth Analysis, 2031, 2024). The growth in urbanization & population demands for more
daily products and that demand predicts a constant growth of the grocery industry in coming
years. Persistence implies that the market is expected to grow to $15 Trillion USD by the end of
2031 with the shift and growth towards e-commerce and digital platforms (Food & Grocery
Retail Market Size & Growth Analysis, 2031, 2024).
Pre-scenario environment
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The grocery business operated as part of a globally linked supply chain before these
interruptions. Retailers responded to consumer demand for both specialist imports and
reasonably priced private-label goods by sourcing products abroad to cut costs and take
advantage of more stable input pricing. There are several big businesses in the industry, such as
Walmart, Target, Kroger, even Amazon. But the one we are focusing on this paper is Aldi. As
Aldi states “In 1961, the Albrecht Family founded the world’s first discount grocery store in
Germany. 16 years later in 1976, we opened our first ALDI store in Iowa. Today, with our ALDI
headquarters in Batavia, Illinois, we have grown to more than 2,400 stores across 38 states with
more than 45,000 employees” (Us, n.d.). Aldi established a niche by providing a large proportion
of private-label products roughly 90% of its offerings which helped manage costs and promote
brand loyalty. It is well-known for its straightforward storefronts and cheap pricing strategy.
A rather steady and predictable environment governed the grocery industry prior to the
start of major macroeconomic changes. The worldwide integrated supply chain model that most
grocery companies operated under prioritized variety, affordability, and efficiency. Before the
changes the sourcing and cost optimization allowed manufacturers to produce at the lowest cost
possible. Imports flowed freely and free of tariffs, allowing to bring in certain goods that were
not able to be produced within the US borders. These products vary from seafood, medicine,
spices. With the changes in imports now, this model of business will be financially affected and
businesses will have to search for different alternatives to keep costs as low as possible and keep
the supply chain going in order to keep satisfying consumer demand. Some stores like Aldi rely
or pioneered in private labelling, allowing for a different offer to customers and more control in
pricing, while increasing the brand image and identity.
Impact of new scenario on industry
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Grocery chains face acute cost constraints as a result of tariffs imposed on imported food
items and ingredients. This is especially difficult for retailers who depend on exotic imports or
source from nations with cheap production prices. Pharmaceuticals, fresh fruit, and packaged
items are all impacted by the price increases as they go up the supply chain.
Inflation will reduce the purchasing power of not only consumers but also suppliers that
depend on purchasing materials and ingredients from manufacturers. According to the Bureau of
Labor Statistics, U.S. food-at-home prices rose 5.6% year-over-year as of early 2025, with
notable increases in dairy, meat, and bakery goods (U.S. Bureau of Labor Statistics, 2025). The
public are falling more into cheaper options and taking advantage more of discount stores. These
new conditions benefit stores like Aldi but require action from businesses to grow their share of
the market and keep competing long-term.
Opportunities for Aldi
Looking to strengthen relations with U.S. suppliers, they can avoid the extra charges that
come with new tariffs with the use of locally sourced goods. Additionally, this is consistent with
consumers' growing interest in local foods and food transparency. Aldi may be able to secure
advantageous contracts and increase inventory dependability by collaborating with small and
mid-sized farmers, co-manufacturers, and regional food hubs.
Expanding its private labelling image could certainly benefit Aldi, diversifying their
portfolio with everyday essentials beyond food and beverages, with things such as medicine for
example. This will reduce cost and find an alternative for tariff induced costs.
Aldi can think about making strategic mergers or acquisitions to expand its distribution
and sourcing capacities. Partnering or even buying a grocery chain or logistics company could
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revitalize and enhance Aldi’s market position and share and make them less dependent on other
suppliers. For example, Kroger’s acquisition of Albertsons in 2023 changed the way the grocery
industry works and repositioned Kroger in the market positively. As The New York Times states,
“The acquisition, aimed in part to take on Walmart, comes as record inflation continues to
squeeze people’s wallets and as regulators try to rein in the power of giant corporations. That
leaves a number of questions about the potentially industry-shifting deal” (Hirsch, 2022).
Aldi could potentially look for strategic alliances as an alternative to acquisition. Working
with food innovation firms (such as those that create plant-based or lab-grown proteins) could
lead to the launch of new product lines that are sourced locally and are exempt from tariffs.
Investing in technological advances is also important to thrive in the future. The use of AI to
forecast demand could help with inventory management and keeping an edge over competitors.
To conclude, the new economic conditions, including unemployment rates going up,
present a demand for change for retailers. Aldi is in a good position to tackle that with its private
labelling identity. If they manage to adapt to local sourcing and find a way to forgo imported
goods that are affected by the new tariffs. Aldi can not only overcome these obstacles but also
become a more powerful force in a market that is changing.
The grocery industry will always be alive, because these goods are essential to our
wellbeing and survival. There is a chance for a business now to step up and redevelop the way
the industry works and build towards a brighter future for the business. Investing locally,
partnering or acquiring a business, and technological developments will be of massive
importance towards survival in these new conditions.
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SWOT Analysis for Aldi

Strengths:
o Aldi possesses a private labelling model that has a competitive advantage over the
rest, giving them relative control over prices, supply chain and sources
o Aldi’s small stores combined with minimal staff and efficient supply chain ensure
that operating costs are maintained as low as possible.
o Brand possesses a strong value that could survive during economic recessions
o Supply chain is efficient, and resourceful. Fast inventory turnover.

Weaknesses:
o Product selection is more limited compared to other bigger businesses in the
market, i.e. Walmart.
o Their e-commerce is not deeply developed at the present, making it difficult to
penetrate the e-commerce market.
o Much of the catalog of Aldi relies on imported products and goods, which would
see rising costs with the new tariffs imposed.

Opportunities:
o Sourcing more from local and domestic businesses and manufacturers to avoid
tariffs and promote local business.
o Merging or partnering with local producers and logistics companies to improve
supply chain effectiveness and product availability.
o Investment in Artificial Intelligence reducing costs and automize processes and
forecast product demands efficiently.

Threats:
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o
Loss of resources and financial power with new tariffs on goods and medicine
will inflate costs.
o Buying power from consumers will be reduced because of inflation and
unemployment rates going up.
o Disruption of supply chain and effectiveness with tariffs and trade barriers.
To conclude, Aldi is in a good position to survive this new environment because of their
private labelling and efficiency but needs to navigate around the new economic
conditions and tariffs that have been imposed. They would need a major investment in
their digital platform and AI software. Although there is significant margin pressure on
the grocery industry as a whole, companies who can adjust by using smart technology,
domestic sourcing, and price-focused tactics will have a greater chance of succeeding.
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References:
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Food & Grocery Retail Market Size & Growth Analysis, 2031. (2024, July 10).
Persistence Market Research. https://www.persistencemarketresearch.com/marketresearch/food-grocery-retail-market.asp

Us, A. (n.d.). ALDI History | ALDI US. https://corporate.aldi.us/about-us/aldi-history/

U.S. Bureau of Labor Statistics. (2025, February 22). Bureau of Labor Statistics.
https://www.bls.gov/

Hirsch, L. (2022, October 14). What the $24.6 Billion Kroger-Albertsons Merger Could
Mean for Groceries. The New York Times.
https://www.nytimes.com/2022/10/14/business/dealbook/albertsons-kroger-mergerexplained.html