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Bigger Isn’t Better: Why Aldi’s Business Model Leads to Happy Customers and Rapid Expansion

Sometimes, less is more. Truer words were never spoken, and it’s good to know that there’s at least one major company out there that keeps these words close to heart—the Albrecht Discount grocery chain.

If you haven’t had the experience of shopping at Aldi, don’t worry, because it’s very likely that you will soon. “Within the last few years, [the company] has accelerated its expansion by adding more than 250 stores, with plans for 80 more [openings] both in 2011 and 2012,” according to a New York Times article. They first came to the U.S. in the late 70s, and have since built up quite a following among budget-shoppers, myself included.

As anyone who’s frequented their stores will tell you, their inventory is rather sparse. Aldi stocks their shelves with a total of about 1,500 items—significantly less than the tens of thousands of items that larger grocery chains and superstores tend to have on hand any day of the week. But of course, a wider selection is not what Aldi is about. What the discount grocery outlet lacks in variety it makes up for in low prices—very low prices.

Their success is due in large part to the extreme low cost of their privately owned, off-brand items, which is all that they offer. For example, you won’t find Cheerios at your local Aldi, but you’ll have no trouble finding Crispy Oats (their exclusive knockoff), at a far better value, no less.

I’ll be honest—I’m oftentimes not a very thrifty shopper. I tend to need all the help I can get when it comes to saving money, especially with groceries. I’ve been an Aldi shopper for the past couple of years and can vouch for the fact that they’re  a godsend. They’re not the only chain that I shop at, but I honestly don’t know where I’d be without them—probably just broke and hungry.

Sure, the selection at Aldi is somewhat lacking compared to superstores like Wal-Mart and Target, and I don’t always like to settle for a grocery item that’s not exactly what I’m in the mood for, but at the end of the day, I know that I’m saving a boatload—and I know that others, like me, are probably saving as well. Sometimes, that’s just what matters most.

The company’s “business model—cost control, low prices, and limited selection of quality products—has definitely translated into success in every country Aldi enters. It’s a format that appeals to budget-minded shoppers, as well as those on a low- or fixed-income,” according to BrandChannel. It’s an approach that’s equal parts considerate and savvy, and it’s obviously rewarded them. Their streamlined inventory expedites the average shopper’s grocery run considerably, ultimately leaving the consumer with extra time and cash to spare by the end of a visit.

Aldi may not have much compared to bigger supermarkets, but what they do have is unbelievably affordable. Can you really fault them for that? I didn’t think so. Again, less is more, and businesses who depend on cash-strapped consumers could learn from such a philosophy.

What are your thoughts on this discount store chain? Do you think they’ll continue to give larger chains a run for their money? Would you sacrifice name brands to save money?

Image Credits



Joseph Giorgi

Joseph is the head of the Media Team at Quality Logo Products. He's a video specialist, blogger, perfectionist, and all-around likeable guy. When he's not busy focusing on the nitty-gritty details of his written and visual work, he's normally listening to bad 80s music and scouring the internet for useless information on useless subjects. You can also connect with Joe on Google+.

Comments

  1. QLP Kid

    I’m BACK! :)

    Aldi’s is awesome and this is a great post that really points out a lot of great points about Aldi’s…

    The one thing I would like to add is that Aldi’s needs to accept credit cards!

    -QLP Kid

    “It’s How the Midwest was Won…”

    • Les

      One of the reasons Aldi can have good pricing is their cash or debit card only policy. In a way, the store is also teaching people to be disciplined with teir spending. I love it! Check out the good quality weekly offers: I recently got a cordless drill for less than half the price advertised for a similar product at a well known hardware store.

  2. Scooby DOO!

    The consumer needs options; it’s all about supply and demand. Without the Aldi’s of the world, the mainstream stores would charge even more!

    The reason we have three basketball shaped stress balls, is so that you have options; it’s not that we want to confuse you. Just like you can buy a strip steak at Aldi, you can also spend 50-75% and buy the same cut of steak at Whole Foods. But ultimately the choice is yours as a consumer.

    One of the BEST things about QLP is that we carry the “Aldi” and the “whole foods” brands of the promotional world, so it’s one stop shopping, no matter what you are looking to spend!

    • Jill Tooley

      That’s a great way to put it! :)

    • Joseph Giorgi

      It would certainly be a heyday for the Wal-Marts of the world if Aldi no longer existed. It’s a pretty grim thought, now that I think about it.

  3. Lindsay Wenger

    Aldi is a great cost-effective grocery store if you have the time to be going to multiple locations. You are not able to purchase everything that you would at a local Jewel etc., but if you are willing to spend the time going to various stores you will definately save $$$. You can also find many name brands at Aldi but the selections definately change frequently.

    • Joseph Giorgi

      Very true. I don’t shop at Aldi nearly as often as I’d like to because of the sparsity of their inventory. If they carried more, I’d shop there more. But like I mentioned, the prospect of saving money makes Aldi one of my primary grocery destinations.

  4. Chase

    I think that it is a great idea! The only thing is i have been seeing less of them… Personally i think it has to do with how close the store is to your home.

    • Amanda Sneed

      Chase, you’re right, since you can’t get all of your groceries at Aldi, you might be less inclined to shop there if one is not close to your home, but I’d still encourage people to shop at Aldi to save money….maybe just make it a 1x per month thing to stock up on things!? =)

  5. JPorretto

    I think a Aldi could SERIOUSLY benefit from a logo/ image redesign. I’ve personally never shopped there, even though there’s one practically right next to my house. I think it’s mainly because the whole place just seems SOOOO outdated (even though it may not be, i don’t know). That logo is just ripped from the 80′s.

    • Amanda Sneed

      Your comment surprises me Jeff!! I’d think no matter how outdated a place seems, you’d want to at least check it out to save money. I’ve actually never been to an Aldi that is outdated; the stores are small, and the products are stacked in boxes rather than on shelves, but other than that, the stores around us are nice. How can you beat 29 cent mac n cheese!!??

    • Joseph Giorgi

      Hah! Yeah, Aldi would do well to revamp their look. I think after 30 years the time has finally come to treat themselves to a facelift of some sort. If they’re going to remain an indispensable grocery destination to a maturing generation of savvy young shoppers, then they’re going to have to look the part.

  6. Amanda Sneed

    As kids, my brother and I hated it when my mom got our groceries from Aldi…we wanted the cool name brand stuff we saw advertised on tv!! But now that I’m buying groceries for my husband and I, I see how much shopping at Aldi can save a household on groceries.

    Aldi does have a smaller selection of items compared to Walmart’s SuperCenter, but the savings is worth it! I get everything I can from Aldi, and get the rest at Walmart. I think Aldi has really come up higher in the quality area too….there used to be quite a few things that we wouldn’t eat from Aldi, such as their grape jelly, peanut butter, pasta sauce, and cereal, but now we find those products to be of the same quality as the name brands, at the same cost! Win Win! =) Oh and I recently tried out their kitty litter, my cats didn’t notice a difference, and it’s just as good as the Tidy Cats Brand, and Aldi’s brand is half price!! Jeff, I’d encourage you to check it out, you’ll save some moolah!!

    • Jill Tooley

      I remember seeing generic brands as a kid…particularly those yellow boxes with the boring, black text. At the time, my brother and I felt the same way; we didn’t want those ugly boxes because we’d rather have the colorful boxes we saw on the commercials! However, like you, as I went out on my own I quickly learned that brand names are super expensive. Aldi brands are almost identical to name brands now, and I can get a month’s worth of groceries for a fraction of what it would cost to shop at Target or Jewel.

      Sometimes the lines are long at Aldi, but it’s a small price to pay for the cheap prices. I spend much less time shopping, too, because the store only has food items (except for one small aisle) so I don’t get distracted looking at junk I don’t need. And as for bagging my own groceries, I’d almost rather do that anyway. I have a sorting system that works for me!

      I also love their 25-cent cart system. Have you ever noticed that carts NEVER blow around Aldi parking lots like they do at bigger chains? People must really want that quarter back! ;)

      Long story short, Aldi doesn’t do tons of marketing and their stores may be small, but they’re a force to be reckoned with…especially in hard times like this. Hopefully people will like what they see and keep coming back to the little guy even if they have the extra money to spend!

      • Amanda Sneed

        Jill–great point about the carts for a quarter! That is a huge money saver for Aldi, because they don’t have to pay an employee to bring in the carts from the parking lot. Plus it’s free for the customer, because they get their quarter back. It’s interesting though, isn’t it? A quarter is so small, yet you’re right, I’ve never seen anyone leave their cart by their car! They always return their cart to get their quarter back. Yet at Walmart, many many carts get left out. I have know two people who work at Aldi, and another positive thing they have going for them, is that the cashiers do it all….stock the shelves, ring up groceries, etc., so they also have many less employees than other grocery stores, plus they pay their cashiers better! =) Go Aldi!

    • Amanda Sneed

      I meant to say, “those products to be of the same quality as the name brands, at less cost!”

  7. Bret Bonnet

    The “Sometimes, less is more” mantra is what has made Apple so successful. Let’s face it; Apple is the MASTER of cramming a ton of stuff while still somehow maintaining an acceptable level of usability. Even their PACAKAGING amazes me.

    The story behind ALDI is actually quite amazing. I could be wrong but I think the SAME company also owns “Trader Joes”. The company is NOT US based, it hails from the likes of where popular stores like IKEA have sprung from, and while the founder recently passed away, he is UBER rich.

    Talk about a RAGS to RICHES story though.

    If I could get my wife to stop shopping at WHOLE paycheck and instead shop at ALDI maybe I could afford to purchase and wear something MORE than my usual black t-shirt and jeans clothing combination that Jeff and Jay (aka. “stinky”) so affectionately make fun off all the time! :)

    • Joseph Giorgi

      Yeah, Apple’s adherence to minimalism in both design and implementation has served them well for the most part. I’m personally more a fan of flexibility and customization and whatnot, but I can see why the Apple brand appeals to so many. I’ll admit—my workspace Mac is one sexy beast of a machine!

  8. LGroce

    As a college student you learn how to stretch the dollar as far as humanly possible and shopping at Aldi is definitely worth it. I would consider myself a human garbage disposal and eat just about anything so I can even sacrifice a little quality of food on a few things, even though you can rarely taste the difference, to save some cash for the weekends.

    One thing Aldi also does is charge you for your grocery bags, which is genius. You can either bring your own or hunt around the store for empty or near empty boxes to put in your groceries. Just another way to generate and save money for the company.

    • Joseph Giorgi

      Yep yep! Savin’ cash for the weekends is what it’s all about.

      Although I hate having to scrounge around for empty boxes while I shop.

  9. LK

    I like convienence, and if I hadn’t read all these comments I would have gone to Aldi – not have had a quarter to get a cart, not have brought any bags of my own, and would only have had a debit/credit card to pay with. That all sounds VERY inconvienent and I would have walked in to Aldi and walked out pretty angry.
    However, since I’ve read all these comments and now know how to prepare myself for a grocery shopping trip to Aldi maybe I’ll give it a try (with the exception of the certain name brand foods I HAVE to get)

    • Jill Tooley

      Just to clarify, they take DEBIT cards, but not straight-up credit cards. Confusing, I know. You should definitely give it a try…they don’t sell Kraft Mac and Cheese, but I think you’d like the other stuff they have to offer! :)

    • Amanda Sneed

      Yeah, shopping at Aldi is something to get used to. For me, I almost always use my debit card anyway, but I make sure to have it with me, always keep at least 1 quarter in my car ash tray, and keep my Aldi bags in my trunk, lol. So I’m always prepared for the savings!! =)

      P.S. Going to Aldi with no quarter is SOO annoying, I’ve forgotten my quarter twice, and it’s the worst! Because I’m always buying 2 gallons of milk at a time! Grrr

    • Joseph Giorgi

      Yeah, you’ll most likely have to get your brand name items elsewhere, but just think of all the money you’ll have left over from your Aldi trip to do so. :)

    • Jana Tropper

      The quarter and bag things are a little surprising, but they allow you to take the boxes they have in the store (holding the food in the aisles) with you. Perk for them, too – less to clean up.

      Think of it this way: if regular grocery stores charged extra fees on your final bill for using grocery carts without having a quarter on hand (which, to clarify, you DO get back from Aldi) and using the bags they provide, would you be motivated enough to bring your quarter or your own bags? The difference in price on individual products between the other grocery stores and Aldi IS that fee; it’s just spread out across items instead of added as its own line on the receipt.

      But yeah, it’s definitely fun to hear stories of Aldi “virgins” and their confusion at having to rent carts and buy bags.

  10. jtropper

    I absolutely love Aldi. Even though I get a little annoyed at the long lines (what exactly does it take to call in a second cashier??), there’s some time saved at the end because there’s no need to slow down for bagging. Also, I agree with Jill – I spend less money at Aldi because they ONLY have food items. I’m not picking up a magazine or nail polish I don’t need. For people that don’t get into the “experience” of grocery shopping and consider it an annoying chore, Aldi is flippin’ fantastic.

    Jeff, I do agree that the logo is unattractive. It looks like a symbol for a Native American airline.

    (The hippie part of me is saying that’s racist, but I can’t figure out why, so I’m leaving it.)

    • Jill Tooley

      Ugh…just thinking of the traditional “experience of grocery shopping” gives me a migraine. I haven’t shopped at Wal-Mart for 2 years out of personal preference, but sometimes I spend about 2 hours in Target or Woodmans and it makes me crazy by the time I get home. That’s no way to end a work day! When I go to Aldi, I can go in and grab what I need right away instead of wandering around a 50,000-square-foot store looking for the dental floss (and getting distracted by glitter and baubles in the process).

      And you’re right, their logo could use a makeover…

    • Joseph Giorgi

      Nicely put! I can’t stand the “experience” of grocery shopping anymore and I try to make my excursions as brief as possible. When my girlfriend and I are at Woodman’s (a necessity at times when it comes to many grocery items), we’ll spend huge, unnecessary amounts of time in the aisles before checking out. At Aldi, the process is streamlined. Sure, we may not get the variety we’re looking for, but we always end up with plenty of extra time and cash to spare—and ultimately waste. ;)

  11. cyberneticSAM

    I love Aldi! They should have business conventions of how to run a good business as well as a seminar on ethical training for employees. They have an amazing benefits and fair compensation that a lot of businesses (*coughs* Walmart) really overlook when it comes to their hired help. Which in turn rewards them, b/c when your employees are happy people will want to give you their business. I know b/c of their prices and employment policies I keep going back.

    • Joseph Giorgi

      I’ve never given much thought to their employment policies, but that’s a good point! I think someone else commented that Aldi pays their cashiers more than most grocery stores, so it’s good to hear that they hold themselves to such high standards in terms of ethical business practices.

  12. Kristin

    I prefer my local Aldi – cleanest store and best produce. The best thing to do is experiment with their products – start with unpackaged goods (produce) to get a feel for the quality, and then move on to items that you might buy generic anyway – maybe crackers, spaghetti sauce, pasta noodles, etc – and then venture into everything else.

    I save TONS on groceries, only spend 20 minutes or so on each grocery trip and share my experience with all of my friends!

  13. David Mixon

    At first I did not understand Aldi. No brand names, small store, not a multitude of products. I was baffled. Then I started buying my staples there. Veggies, canned goods, paper products, and coffee. Then I spread out to more cost saving items. What savings I reaped! If you do not like their product, they will give you another and refund your money. What a guarantee! I see all kind of cars in the parking lot from junker to Jaguars. Tells you something, doesn’t it?

  14. Jennifer

    Unless you’re part of the top 1%, you don’t maintain your wealth by spending more than you must on everyday items. I’m always amazed at the comments from people who turn their noses up at a store because of lower prices. What they have in attitude I’m sure they lack in actual wealth.

  15. Brian

    I’m amazed as the speed of the Aldi checkout. 1 Aldi checkout line processes probably 4 times the number of items as 4 Walmart checkout lines. Why? There is no bagging of the items and the bar codes are placed at all angles on the items so the items are processed maybe at 1 per second. It’s an industrial engineer’s dream. I’ve often been waiting in line 3 times longer at Walmart with a shorter line.

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