Aldi's Low-Cost Hybrid Grocery Store
With more than 10,000 stores across the country, aldi is a formidable competitor to huge grocery chains and a growing threat to smaller local grocers.aldi The German-based chain's efficiency and no-frills approach to food retail makes it popular in small towns and big cities, where its no-nonsense hybrid grocery/discount store setup offers low prices on everything from fresh produce to imported German cheese. And it's no wonder the store has such a following among thrifty shoppers: The chain boasts that it is up to 50% cheaper than other supermarkets.
The company's roots date back to 1946, when the Albrecht brothers established a German-based chain with lower prices than its competitors.aldi The brothers focused on creating a low-cost business model, and they were ruthless when it came to weeding out products that weren't selling. They didn't merely reduce the shelf price and send out a rebate—they simply stopped stocking the item, which meant they saved on storage costs and could pass those savings on to shoppers.
Today, aldi is a multibillion-dollar operation that specializes in low-cost groceries and has expanded internationally.aldi The chain also focuses on reducing operational costs and using data to customize its stores to suit local tastes. For example, if aldi finds that customers want to buy more organic products, the company will increase its selection of organic items.
The chain is able to offer such low prices partly by cutting out middlemen.aldi Aldi has a system that requires distributors to deliver products in shelf-ready boxes, saving employees the task of boxing up orders. The company also tries to reduce staffing costs by cross-training its workers so that the same employee can perform multiple functions (e.g., a cashier can also be a product tester).
A typical aldi store is a lot more sparse than your typical supermarket, with fewer aisles and less variety of goods. To cut down on inventory management costs, the chain only stocks products that have a high demand in its market and avoids trendy products that will soon go out of style. Aldi also doesn't offer many name-brand products, instead focusing on its own in-store brands and buying overstock from manufacturers.
Aldi also uses its data to tailor its store layouts and improve customer experience. Its US headquarters in Illinois analyzes customer shopping habits to identify trends, and then it alters the store layout accordingly. It also studies foot traffic to understand how customers move through the store and what types of products are selling well.
In addition, aldi's low prices often cause its competitors to lose money, especially smaller local grocers that rely on regional shoppers. For example, a number of stores run weekly sales on name-brand cereals to compete with aldi's low prices, and many grocers will accept coupons, which can further slash the price of a box of cereal. Meanwhile, the chain's acquisition of former rival Winn-Dixie and Harveys locations will allow it to expand its reach into the South and West.