Comparing the Strategies of Shop Operation Internationalization of Limited-line Grocery Discount Stores by Aldi and Lidl

The limited-line discount store as grocery retailing format succeeded in continuously increasing its market share in Europe as well as in other parts of the world. The business model of hard discounting applied by the German retailers Aldi and Lidl proved to be particularly successful. By internationalizing business concepts which they had previously developed in the German retail market Aldi and Lidl gained leading positions in the European discount segment of grocery retailing. The internationalization strategies of both firms are compared on the basis of the system of internationalization strategies set up by Kutschker and Schmid. Both firms have chosen similar market entry modes whereas they differ strongly as to target market strategies, timing strategies, resource allocation strategies and business coordination strategies. The choice of the strongly interlinked strategy components by Aldi and Lidl was based on different business targets which the firms pursued in the long run. The diverse internationalization strategies led to significant differences not only with regard to the speed of turnover increase abroad, but also relative to the cost of external market penetration, the performance of the distribution networks and the structure of accepted entrepreneurial risk. The different speed of international expansion resulted in an inversion of the competitive position between Aldi and Lidl in the international grocery market over time which has a strong impact on the present and the future competition dynamics in the discount segment of international grocery retailing.