German Discount Chain Aldi Uses Recession to Expand on Wal-Mart’s Turf

finding Dulcinea ^ | January 15, 2009 | Anne Szustek

[wolf78]

The German-owned grocery chain plans to expand its U.S. operations rapidly and grab market share from Wal-Mart. But its ownership and ubiquity has earned it some enemies.

Aldi’s low prices—up to 40 percent lower than those of regular supermarkets—have won the chain many vocal fans. Amy Clark, creator of MomAdvice.com, a site focusing on lifestyle for stay-at-home mothers, “I often tell my friends and family that Aldi Supermarket is how I can afford to be a stay-at-home mom. Although I say this jokingly, I do credit Aldi a lot for allowing the room in our budget that we needed for me to be home with my son.”

The store is a type of grocer known as a “limited assortment discounter.” Aldi has some 1,300–1,400 items in its inventory, compared to 45,000 at larger chains. For the most part, it sells only house brands, which, the store is quick to point out, test favorably against some recognizable labels. Across the U.S. grocery sector, store brands account for some 22 percent of foodstuffs sales, according to Nielsen Research cited by The Wall Street Journal. During this recession, they have only been growing in popularity.

[wolf78]

ALDI can afford to pay its cashiers twice as much as the competition as they found a way to make them work four times as hard.

[Sherman Logan]

Aldi prices really are significantly better than the grocery store.

They’re even better than Costco, and you don’t have to buy massive quantities to get a good price.

[Salgak]

Actually, I rather like ALDI. Good food, great prices, no frills. Food’s a commodity, so who NEEDS a big brand name: the food inside the box is the same.

[wendy1946]

Neat but no real threat to wallies in the US. All they sell is food.

[repubpub]

I’ve never heard of ALDI. Is it an east coast chain or nation wide?

[Palladin]

I love Aldi’s! It’s great for senior citizens on fixed incomes.

We eat very well for $200 a month. About $7 a day.

[Sherman Logan]

Don’t know. Their website is poorly set up to show this.

One caveat. The stores are relatively small and have a limited selection. It’s a lot like an A&P from 50 years ago. The massive redundant selection we’re all used to isn’t there. In particular a very limited produce selection.

But a pound of tortilla chips is 79 cents, versus $3 and up at most stores. A gallon of milk is 2.29. And so on.

Many of their house brands are excellent, a few are lousy, but you learn to just not buy those again.

[org.whodat]

http://www.aldiuscareers.com/location.aspx

[org.whodat]

I would shop there just to take business from walmart.

[Marysecretary]

I have a friend who works in Aldi’s and they work her to death. She’s an older person and works twice as hard as the young ones who leave and don’t finish cleaning up and putting stock back on the shelves. I like their canned goods and produce.

[Marysecretary]

They do sell other things now, too. You can often get good specials on summer porch furniture, etc.

[repubpub]

Thanks for the link.

[UB355]

That site is a listing of their warehouse locations

[madison10]

They’ve been doing that for years. When we shop we call it going to Waldi’s because in our area three, or four of the stores (Wal-mart/Aldi’s) are very close together.

For the most part Aldi’s is good for quality, have to watch some of the soups though. ;)

[Dr. Bogus Pachysandra]

I eat a lot of fish. My Sister had been buggin’ me to go to Aldi. I finally went. Lots of off brand pasta and mezican stuff. But I finally got to the frozen foods. $3.29 for a pound and a half of wild caught Whiting. Fabulous!

[WhyisaTexasgirlinPA]

Good, you not going to Walmart means it isn’t as crowded when I go there..... they are the true American success story - built the company from the ground up. I don’t understand the Walmart haters.

[blaveda]

My son works for the company, they hired him out of college, no unions, pay their staff a living wage, products are terrific and yes they do sell limited supplies of nonfood items. They extend from the east coast to the middle of America with plans to open 100 new stores per year. Our son began as District Manager, the position is a challenging career. He works very hard but has moved on up in the organization. They just opened another warehouse (500,000 sq. ft.)in Stores Conn. The warehouse is immaculate, your food costs should be reduced at least 50%

[Eagles2003]

“We eat very well for $200 a month. About $7 a day.”

No kidding, I saw a 5 oz filet mignon wrapped in a slice of bacon for $6.99, the ones in my fridge cost $1.99 at Aldi.

They just moved into town, I don’t buy enough to even justify messing with shopping cart, but I get good deals.

Went to Trader Joe’s once and walked out, didn’t buy squat.

[Revolting cat!]

I have heard that Garibaldi shopped at Aldi!

[wolf78]

Neat but no real threat to wallies in the US. All they sell is food.

Of course. Walmart has such a huge market share for a reason: it has perfectioned the idea of one-stop-shopping, which is so very popular in the US (less in Europe or other parts of the world where you do one big shopping trip a week for staples and get the rest of the stuff you need from specialized stores, bakeries, the butcher etc. and where you probably wouldn't buy e.g. a bicycle in a supermarket.). However, it has been said that ALDI is the one chain that Walmart fears because it cannot win a price war against ALDI:

ALDI only carries a select number of fast-moving items: Less spoilage, far less store rent due to smaller stores.

ALDI customers do most of the work themselves, no employees for bagging or shopping cart retrieval.

Because ALDI carries only one choice per item it buys relatively high volumes from a single supplier, so Walmart has less leverage to pressure suppliers.

ALDI is a private company with money on hand. Walmart as a publicly traded company found it much harder to build a business in Germany, ALDI's home turf, eventually having to call it quits.

That doesn't mean that Walmart is in danger - far from it, right now they are also profiting from the recession. However, ALDI has all the time in the world to grow its US business.