The Landscape Of ALDI Supermarket Store In Australia: Benefits Of Self-Checkout Technology

Demonstrate your level of awareness on the issues involving technologies used in developing nations when it comes to conducting business internationally.

Overview of the ALDI Supermarket Store and Technological Landscape

International business is considered to be an essential aspect of the trade and various organizations have been developing considerably by developing their technologies and ensuring that they are successfully able to engage in trade and thereby make efficient use of all the resources in order to gain a competitive advantage in the long run (Wu et al. 2016). As the competition in business has become increasingly fierce, it is important to innovate and apply those innovative components effectively for the welfare of the business. This shall also assist in ensuring that the firm is able to sustain for longer time and is able to make adequate profits and ensure growth (Kumar and Reinartz 2018). The primary aim of the report is to discuss the landscape of the business which has been chosen as the ALDI Supermarket store in Australia. The technology chosen for adaptation is the Self-checkout system. The background of the business will be discussed along with the technological landscape of the chosen industry. The benefits of the application of the technology will be discussed along with the capacity of it.

The ALDI Supermarkets in Australia operates in the Supermarkets and Grocery Stores Industry in Australia which is one of the most competitive industries in the country. ALDI has grown considerably in the last few years and has changed the dynamics on the industry which was earlier dominated by the duopoly between the Coles supermarkets and the Woolworths. Not only has ALDI grown in popularity, but it has also grown in the market share (Aldi.com.au. 2018). The organization is popularly known for its discounted private label products.

The entrance of ALDI has led to the price wars and private label expansion among the other firms. As a response to this, the supermarkets which are smaller in nature tend to struggle in this increased price intense industry. Moreover, for the individual players, the profits have fallen down considerably. The Australian supermarket and grocery industry earned around $ 102 billion in the last few years with an annual growth rate of around 3%. Moreover, the organizations employed around 362102 people and has a total of 1891 stores.

ALDI is from German origin and has stores in various parts of the globe. The chain was found by Karl and Theo Albreht in the year 1946. Although the firm takes up considerable steps to ensure that it is successfully able to combat competition, it is faced by technological advances as adopted by the competitor organizations.

Benefits of Self-Checkout Technology

The market share of the different supermarkets in Australia has gone for a change whereby Woolworths holds a 37% share which is followed by Coles with a share of 31% and other companies with 16.2%. ALDI is currently present with a market share of 8.7%. The business of ALDI has been doing considerably well and this has led the competitors to slash prices and to expand their label offerings.  The average price of the grocery basket has declined by 5.1% and the prices of the different fruits as well as the vegetables has witnessed a great fall.  Although the customers have benefited greatly from this, it is the retailers who have been facing a huge decline. According to Ibis world, over the next five years the revenue forecast will rise to $97.7 billion in the year 2018-19. ALDI has been growing at a rate of 15% in the last five years and there is a news that it will be expanding to Western Australia and South Australia and witness an increase in their market share (Lee and Yang 2013). Services like self-checkout, pick up and order online, home deliver through online applications are some of the technological developments in the Australian Supermarkets industry.

Hence, delivery fleets in the chosen domain has increased considerably and the consumers generally prefer to shop online. This has led to a decrease in the operating costs of these supermarkets and for this reason, instead of dealing with this as a challenge, the brands have taken this as an opportunity to reduce their store costs and invest instead in online domains (Lee, Fairhurst and Cho 2013).  Hence, currently, although the other companies like Woolies and Coles have adopted all available technology in the domain including the self-checkout system, Aldi has not yet adopted it and believes in including the human touch aspect in the domain.

Issues with regards to conducting business internationally involving the Supermarket industry with respect to ALDI

All international businesses possess certain difficulties while conducting business. However, as the Australian supermarket industry is highly competitive in nature, there are a range of problems which the business of ALDI faces in the domain (Ixtenso.com. 2018). Some of those problems being faced have been listed as follows:

Customer service: As the bargaining power of the different customers has increased considerably, they exert a stronger position in the industry. This can also be contributed to the fact that as the different consumers have been faced by a wider options and different private labels, they tend to get impatient and are not willing to tolerate the slightest of the inconvenience (Weeklytimesnow.com.au. 2018). For this purpose, there have often been various issues in regard to the service of the different customers.

Challenges Faced by ALDI in the Australian Supermarket Industry

Distributed demand:  This issue relates similarly to the issue of the wider opportunities available to the different consumers. Hence, the demand for the goods sold by Aldi including the private label options have altered considerably (Kaushik and Rahman 2015). With the advent of online shopping the different organizations now prefer to shop online and distance is no more an issue. For this purpose, even for the ALDI Supermarkets which are situated at prime locations, the physical sales have dropped considerably.

Employee issues: As the different customers have been faced by a wide range of choices and they can choose which company to purchase from, the employees who possess similar skills of can change their companies frequently and even share their trade secrets which may lead to a loss.

Additional time taken by manual checkouts: The manual checkouts have proven to be the most troublesome aspect of the whole shopping experience for the customers (Ixtenso.com. 2018). After purchasing the products, the customers have to stand in long queue and on top of this they have to deal with the rude behavior of the employees.

Competition: Lastly, the competition from the huge giants also act as a problem for ALDI. This is because, although ALDI has been successful to a certain extent, the major share of the market is still held by Woolworths and Coles (Luftman, Lyytinen and ben Zvi 2017).

The technology chosen to be applied to the current business of Aldi is the self-checkout system. The self-checkout system allows the different customers who purchase goods from the stores to scan their own products and pay (Sainath et al. 2014). Although the customers and retailers are generally worried about the acceptance of the technology, the self-checkout system has already been adopted in various parts of the globe and by various customer segments who find the system rather refreshing and thereby they can avoid standing in the queues and being served by the checkout cashiers (Baden-Fuller and Haefliger 2013). Moreover, as identified by the previous in the previous sections ALDI faces intense competition from the different companies and that due to this, all of the companies have adopted the self-checkout systems but this is not the case for ALDI and hence for this purpose, the self-checkout system has been suggested.

The self-checkout systems comprise of a large number of systems whereby the checkout system is either partially or entirely managed by the different consumers. The self-checkouts come in various designs ranging from stationery as well as mobile solutions and can be put up on the inconvenience of the different retailers (Westerman, Bonnet and McAfee 2014). In the scenario of a stationary self-checkout system, the customers can scan the items personally and move it across the bio optic image scanner (Ibisworld.com.au . 2018). The software of the system matches the barcode of the product scanned to its description on the system.

In this manner, the products are then placed on a different scale and then the next step needs to be scanned. Moreover, some organizations also manage simultaneous self-checkout systems along with manual ones.

It provides a set of instructions to the different customers: The different customers can easily make the self-checkout system function as they tend to be provided with a set of instructions which can then assist them in ensuring that they are able to carry out the entire system smoothly. According to Leung and Matanda (2013), there is a simple interface which tends to guide the different users and assists them to use the entire process. However, the retailers need to ensure that all the products are easily available on the entire system which will then guide the different customers accordingly with respect to the weights and the other pricing aspects.  Moreover, using this system, the customers will also be able to redeem various gift vouchers. This shall make the entire system very easy for the customers and the integrated cash management systems can remain updated as well.

Mobile scanning system: The mobile scanning system is opposite to the stationery system and using this the different customers will receive a hand held device with the help of which the products can be scanned throughout their shopping trip (Kumar and Reinartz 2018). In this manner, the data of their shopping gets transferred to the POS System and with the help of this, the customers may simply pay at the end of their trip or at a separate counter altogether.

Ability to digitalize the entire system: In this manner, by adopting the self-checkout system, the entire system tends to become digitalized (Payne and Frow 2013). This means that the management of the different aspects of the system becomes easier and any changes which need to be made can be done just on the POS System and will moreover reduce the burden on the staff as well. 

Experienced long term growth:  The self-checkout system has been growing considerably and the major driver of the self- checkout growth around the globe has been primarily because the traditional checkout and queue system. In 2012, there were around 27000 self-checkout terminals around the globe but in the year 2018 there have been 60000. However, it needs to be understood that the self-checkout items must be less than 15 items. If it is more than that, it might turn out to be difficult for the other customers as well.

Ability to reduce queues and inconvenience: The primary capability of the self-checkout system is that it reduces the queues and inconvenience caused to the customers who do not like to wait in the traditional queues (Orel and Kara 2014). The traditional queues tend to have a negative impact on the minds of the customers and moreover, tends to cause a bad name to the brand image.

The implementation of the self- checkout system will have a positive impact on the business of Aldi in Australia. It will increase their competitiveness as compared to the other firms in the same industry and Australia and improve the image of the organization in the eyes of the customer (Hassan, Sade and Rahman 2013). Some impacts of the Self-Checkout system on Aldi Australia have been provided as follows:

When the self-checkout system will be installed at the different Aldi stores as present in Australian Market then the customers will be served in a shorter time frame. This means that in the same time frame, the organization will be able to make more sales and lead to less physical activities as well.  The purchases are dealt with faster in this scenario and moreover, it serves manual labor and additional costs.

The self-service checkout can be easily kept clean and tidy and instead the staff which were earlier appointed at the checkout counters can now be utilized for other beneficial activities in the stores (Elliott, Hall and Meng 2013).

Very often the different customers who are present in the store do not like to chat with the members of the staff and would like to instead conduct their own tasks, this can be assisted by following the self-checkout system and for those who converse in different languages, can easily conduct the business as well.

The store capacity can be increased (Foodnavigator-asia.com. 2018). This is because the self-checkout systems will consume less space and this can lead to efficient operations and the company can give more variety in the same space.

The entire self-checkout procedure is very economical in nature as it assists the organization by saving the employee costs and moreover, with the help of this the company can improve its profits by making one time considerable investments.

Therefore, as witnessed from the analysis having been made on the implementation of the self-checkout system at the ALDI store it can be stated that it would be highly beneficial for the organization to adopt this plan as it will lead to positive results on the side of the company. Moreover, initially Aldi does not need to implement this system all it once in all the stated stores. However, they need to implement the chosen system in different phases (Retailcustomerexperience.com. 2018). In this first Phase, the company can ensure that they implement the new system in only certain popular stores and that too there needs to be a presence of the manual self-checkout counters as well. This will then assist the organization to help the customers and measure the suitability of the entire procedure in the store (Drnevich and Croson 2013). After the customer feedback is taken from the different customers, the Aldi can then enter into the second phase and ensure that almost all stores in Australia now have the self-checkout system. Proper training needs to be provided to the different customers which will then assure that they are able to make use of the entire system efficiently. Moreover, the adoption of the system will results in good outcome for the firm. Although the Aldi has a good checkout staff who are quite fast in their checkout process, however, implementation of the chosen system will assist them adapting to the requirements of the different firms in the chosen industry and enable them to be at par.

Conclusion

Therefore, from the given analysis it can be stated that, the Australian retail sector has been evolving considerably and that there have been various changes in landscape both traditionally and systematically. Hence, in order to keep up with the operations of the firm, the organization needs to ensure that it will successfully be able to match up to the level of its competition. The report identifies the current issues and state of the Australian supermarket sector and chooses the ALDI Company as the reference. The technology related to the self-checkout system had been recommended to be implemented and the capabilities along with the benefits of the self-checkout system in Aldi have been assessed accordingly. The strategic way forward has also been provided.

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