ALDI

From Wikipedia, the free encyclopedia

1 History
2 Geographic distribution
3 In-store description
4 Low price philosophy
5 Advertising policy
6 Checkout system
7 Reputation
8 Business practices
9 Aldi Talk
10 Trivia
11 Competitors
12 Aldi Brands (US)
13 References
14 External links

ALDI

Type	German Multi-National
Founded	1948
Headquarters	Essen, Germany
Key people	Karl Albrecht, Co-Chairman Theo Albrecht Co-Chairman
Industry	Retail (Grocery)
Products	Mainly own brand, with a few larger brands
Revenue	37 billion USD (2004)[1]
Slogan	Qualität ganz oben - Preis ganz unten (Rough Translation:High Quality-Low Price) Spend a Little, Live a Lot
Website	Aldi International

ALDI is a supermarket chain based in Germany. It is actually two separate companies, but is commonly referred to as one. The company's name stands for Albrecht-Discount, using the founders' last name. Historically, Aldi is said to have been Germany's first real discount supermarket. As of 2006, its chain of over 5,000 supermarkets with low prices on a limited range of goods can be found in sixteen countries ^[1] with global revenue of 37 billion dollars (29.3 billion euro)^[2]. The name Aldi is not used in all the markets it operates; in Austria and Slovenia the company trades under the Hofer brand.

[edit] History

The company was founded in 1948 ^[3] by the brothers Karl and Theo Albrecht in Essen, Germany. Initially it comprised only one small food shop.

[edit] Geographic distribution

A map of the countries in Europe where Aldi operates, orange: "Aldi Süd", dark blue:"Aldi Nord"

Aldi Nord operates in

Northern Germany
Belgium
Denmark
France
Luxembourg
The Netherlands
Poland (coming soon)
Portugal: 5 stores opened June 29, 2006
Spain

Aldi Süd operates in

Southern Germany
Australia (In Queensland, New South Wales, Victoria and ACT)
Austria (as Hofer)
Ireland
Slovenia (as Hofer)
Switzerland
United Kingdom
USA

[edit] In-store description

ALDI Süd in Neusäß, Bavaria, Germany

Aldi specialises in staple items such as food, beverages, sanitary articles and other inexpensive household items. Many of its products are own-brand labelled, with the number of outside brands being very limited, usually no more than two different brands for one kind of product and often only one. This increases the numbers of sales for each article and also allows Aldi stores to be smaller than supermarkets which cover the same range of products but with more diversity. Also it allowed Aldi to avoid the use of price tags even before the introduction of barcode scanners (see below).

However, in Australia Aldi had to concede that there was no substitute for Vegemite and the stores stock this brand albeit usually in only one size. Also, they stock Nescafe Blend 43 and an alternate imported Nescafé brand in "competition" to each other. Similar difficulties in the United Kingdom exist with yeast extract (Marmite) and sweet pickle (Branston Pickle).

ALDI in Baltimore

In addition to the standard assortment Aldi also has weekly special offers, some of them on more expensive products such as electronics, appliances or computers, usually from Medion. Although not always available, but regularly put up for sale are clothing, toys, flowers, gifts. Specials are only available in strictly limited quantities and for a limited timeframe (one week). In the past some of Aldi's early computer offers were so popular in Germany that all available items sold in only a few hours. These computer products included in 1987, a Commodore 64 home computer pack.^[4]

Aldi is the largest wine retailer in Germany. Aldi mainly sells exclusively produced, custom-branded products (often identical to and produced by major brands) with brand names including "Grandessa" and "Fit and Active". American Aldi stores also feature bargain-priced, gourmet foods imported from Germany. This is also the case in Australia. Although Aldi emphasises low prices, reports from a German consumer watchdog suggest that this does not negatively impact the quality of Aldi products.

In the USA, Aldi Nord CEO Theo Albrecht owns the Trader Joe's chain of specialty grocery stores. However, it is not Theo but his brother Karl Albrecht's Aldi Süd that conducts Aldi's operations in the USA.

Due to the comparatively small selection and almost complete lack of brand name products, first time customers or customers that come from countries with a strong presence of hypermarkets (notably the USA) are occasionally disappointed when shopping at an Aldi store (dented canned goods are not uncommon), but due to the store's low prices, many shoppers take this as an acceptable sacrifice.

In Australia, the US, and the UK, Aldi also sells fruit and vegetables already pre-packaged (as opposed to being loose) to make it easier and faster for the customer to select and checkout operator to scan (instead of weighing and checking prices).

[edit] Low price philosophy

Aldi in Baltimore, MD

Aldi's "strictly no frills" approach is evident for instance in that Aldi stores do not decorate aisles — or even fill shelves for that matter: Pallets of the products on offer are parked alongside the aisles, and customers picking up products will gradually empty them. When all items on a pallet have been sold, it is replaced. Long lines at the checkout counter are also common, reflecting Aldi's minimal staffing levels, as well as the competitive situation in Aldi's native Germany, where long supermarket checkout lines are part of daily life. However, due to the efficient checkout system, a long queue does not necessarily translate into longer waiting times than in other supermarkets.

These and other cost-cutting strategies save Aldi money and the general price level in Aldi stores shows that most of these savings are passed directly on to consumer. Aldi has carved its own (actually rather large) niche with this approach: While shoppers may not like shopping in a bland or industrial-looking (and possibly congested) store, such lack of frills has become part of the accepted norm with Aldi, and consumers are willing to accept it because of the "incredible value" they expect to get in exchange. ("Top quality at incredibly low prices" and "Spend a little, live a lot" are Aldi's marketing slogans.)

On the rare occasions when Aldi stocks national brands made by companies such as Procter and Gamble and Kimberly Clark, unlike most other stores, Aldi does not accept manufacturers' coupons.

Aldi also profited from the introduction of the euro in Germany and other countries. Consumers believed that many merchants had used the currency changeover as a cover to increase prices, often substantially; which in some cases has been upheld by independent studies. In contrast to other supermarkets, Aldi prominently listed "before and after" prices on posters in stores for months after the introduction, and generally rounded its euro prices down. As a result, Aldi earned a great deal of customer respect.

The fact that Aldi stores try to stay small further helps pass the savings onto the consumer, as Aldi spends less on the sometimes high land prices of urban Germany.

[edit] Advertising policy

Aldi has a policy in Germany of not advertising, apart from a weekly newsletter of special prices called Aldi informiert (Aldi informs) that is distributed in stores, by direct mail, and sometimes printed in local newspapers. It claims this is a cost saving that can be passed on to consumers. However, in the USA, Aldi advertises regularly via weekly newspaper inserts and Aldi television commercials have begun airing on the TBS network, and in the UK, print and television ads appeared in mid-2005. Aldi does not have publicly listed telephones in stores to minimise the time checkouts are not utilised.

In Australia during the period immediately after store openings, Aldi used two page colour advertising particularly in local suburban give away newspapers. They have also delivered the full colour leaflet used in store to householders' letterboxes in store localities. In addition they offer an e-mail subscription to a weekly newsletter.

With the more recent success of supposedly upmarket rivals such as Marks and Spencer marketing the quality of their produce, the UK advertising for Aldi now consists of a large amount of reference to products sold at Aldi that have won awards in group tests from the likes of Women's Own or Good Housekeeping magazines, in an effort to underline the quality of the food.

[edit] Checkout system

Aldi's checkout procedure is highly standardised, with checkout operators sitting down in swivel chairs, passing products through a two-sided barcode scanner. Products have very long barcodes covering several sides of the packaging to speed this procedure. Cashiers save additional time by preparing the most likely amount of change while the customer is still searching for money in his/her wallet.

Aldi was, however, a latecomer to barcode scanners, and many stores only added them in 2004; previously, cashier clerks would manually enter a three-digit code for each item from memory (Aldi Nord) or the price (Aldi Süd). An advantage of this was that the cashiers could already type in the prices of all the articles on the conveyer belt even if the customers were blocking the process by not putting the articles quickly enough back into their shopping cart.

Once products have been scanned, they are put directly in the shopping cart, which has a special dock on the counter for this purpose. This is why Aldi stores in Germany insist that customers use a cart; the customer is expected to bag groceries at a separate bench. In most countries Aldi does not offer hand baskets. In Denmark hand baskets are available in all Aldi stores.

In the US, Australia, The Netherlands and the UK, Aldi do not provide free plastic shopping bags. Instead the customer can purchase various types of plastic/recycable bags at the checkout to cart the goods out of the store The carriers range in Australia ranging from 15¢ through to $2.50, €0,99 in the Netherlands and in the UK from a standard size carrier at 3p to a reusable carrier at 99p. In the US Aldi offers paper bags for 5¢, reusable plastic bags for 10¢ and insulated freezer bags for 99¢. In many USA stores, the freezer bags are only available during the summer months and holidays. Customers often utilize the emptied merchandise boxes from the shelves as another means to transport items.

[edit] Reputation

ALDI in Hjørring, Denmark

In Germany, before about 1990, Aldi shops were often ridiculed as being cheap shops selling poor-quality goods. Aldi's customers were alleged to be only poor people who couldn't afford to shop elsewhere. In the USA it is sometimes joked that "Food Stamps are the official currency of Aldi." Being held in such low esteem by many did not seem to dent Aldi's profits however. After German reunification, many German middle class families had to cut down their spending and Aldi's popularity and public acceptance grew^{[citation needed]}. Many consumers discovered that the poor reputation of Aldi's products was undeserved. This shift in public perception was boosted by a series of cookbooks that only used Aldi ingredients, which led to the emergence of a kind of Aldi fandom into the German mainstream. This can be seen by books like Aldidente with recipes containing only ingredients found at Aldi (which was later sold as a special at Aldi), as well as the German language newsgroup de.alt.fan.aldi.

In countries such as the UK, where the level of service and presentation of mainstream supermarkets is higher than in Aldi's native Germany, Aldi's public reputation had not improved in the same way. Despite this, and the strong price competition between such British retailers on precisely the basic goods Aldi sells, the firm remains profitable. However it is small player with a grocery market share of less than 3%.

In the United Kingdom, Aldi (just like its rival Lidl) is often the centre of snobbery regarding the wealth of a person, particularly with the younger generation. It is considered a vital part of the chav stereotype. Many consider it to be demeaning to shop at Aldi, and as a result a lot of students will not admit to shopping there if they do. However, in some cases, this is not always true. Aldi and Lidl have almost accrued a cult status amongst some students in the UK. Whereas in their younger days they may have mocked it, many students have come to favour Aldi and Lidl and things such as £1 shops.

In the United States, Aldi often locates its stores in areas with cheap property, which is often synonymous with proximity to high concentrations of impoverished minorities. Aldi stores in many US States accept public assistance debit-style cards as payment.

In Sydney, Australia, also, although Aldi still retains a relatively new presence, it already has gained a reputation for being patronized by the poor or lower-class. Due to the lack of brands, store presentation, mainstream advertising, and other factors, Aldi tends to appeal to poorer families or students. Many people joke about shopping there, simply "checking it out" or going to buy the unique cheap items on sale for a laugh^{[citation needed]}. The trend is starting to move to more favorable locations as they have opened a store in North Sydney which is a North Shore suburb of Sydney. This is a large business hub and also close to many upper middle/upper class suburbs.

Members of Melbourne's large and well-off German populace are often to be found (and heard) shopping at Aldi and this may have something to do with the comparative difference in the reputation of Aldi.

[edit] Business practices

Many Aldi practices are common in German supermarkets but largely unique to Aldi in markets such as the U.S. and Britain. These include the system of metal gates and turnstiles forcing customers to exit through the checkout, the practice of charging for shopping bags, and the fact that Aldi until recently accepted only cash (from 2004, German stores have begun to accept the "EC electronic cash" debit card). Debit cards are also accepted in the USA, the UK, Austria, Belgium, France, the Netherlands, Switzerland and Ireland.

Aldi generally does not accept credit cards, though Aldi Australia accepts MasterCard, Bankcard and Visa for an additional 1% surcharge. As of May 2006, the Aldi chain in the UK upgraded their debit terminals to facilitate the chip and pin security measures that have been implemented by the customers' card issuers. In the US, Aldi accepts debit/pin-based cards (with cash back) and recently added the acceptance of Discover Card. Discover Card and Aldi also have an in-store marketing campaign to get customers to sign up for the card.

Another practice at Aldi stores that is uncommon in some parts of the world – although ubiquitious in Germany – is requiring a coin to use a shopping cart. When the coin is inserted, the cart is unlocked from the other carts. This is done for efficiency reasons; the coin is returned when the shopping cart is returned to its bay so customers will return the cart, saving Aldi's staff from having to collect carts from the parking lot. This also may help a little to prevent the carts from being stolen.

Aldi only began to use barcodes in the early 2000s. Previously, cashiers were required to memorise prices for all items in the store. They had small cheatsheets at the register if they forgot a price or for items in the seasonal section that had high turnover. All item prices were hand keyed on a number pad.

Aldi stores worldwide are approximately the same size - 800 to 1,000 square meters. The company's stores in Germany are similar in size to those of competing supermarkets, and they can often be found in shopping centres or elsewhere where retail units of this size are common. However, in other countries, such as Britain, France, and the U.S., Aldi stores are far smaller than those countries' typical supermarkets or hypermarkets, and tend to be free-standing, purpose-built structures. Not only are all stores roughly the same size, but also have the same appearance of a low building with slanted roof. Aldi stores, at least in Germany, have a similar shop layout, making it easier for customers to find the goods they are looking for even in a store that they do not know.

Aldi stores often have limited opening hours, such as where restricted by law (until 18:30 weeknights and 14:00 Saturdays) in Germany until these laws were relaxed somewhat in 1996 and 2004. Some of its German outlets, particularly those in shopping centres, now stay open until the revised legal closing time of 20:00. On the other hand, Aldi stores in the U.S. and UK close at 19:00 on weeknights, earlier on Saturday, and, until recently, most remained closed on Sunday (Aldi stores in the UK, now open on Sundays between 10:00 and 16:00), in contrast to the late or 24-hour opening times of many U.S. and British supermarkets. Aldi stores in Australia generally open from 09:00 to 19:00 weekdays and open both Saturday and Sunday till 17:00/18:00.

In April 2000 Aldi UK paid damages to a shop manager they had fired for being HIV-positive. Aldi reached an out-of-court settlement with Mark Hedley, former manager of the Aldi supermarket in Seaham, County Durham, shortly before an employment tribunal hearing. Mr Hedley complained of discrimination after he was asked to leave because bosses said other staff felt uncomfortable around him. It is thought the damages paid to Mr Hedley ran to six figures^[5].

[edit] Aldi Talk

On December 7, 2005, based on their well known brand, Aldi (both Nord and Süd) in Germany introduced a low-cost pay-as-you-go mobile phone rate Aldi Talk, piggybacking on the e-plus network. They offered rates of 5 eurocent per minute/SMS to other Aldi Talk customers and 15 eurocent to landlines and other mobile phones. This phone offer is available on either a "starter set", which has a SIM card and 10 euro worth of credit, for 19.99 euro, or a Medion mobile phone with a SIM card, for 59.99 euro^[6].

Hofer in Austria offers a pay-as-you-go service called "yesss!" using Austria's One Network^[7].

[edit] Trivia

"Aldisierung" (Aldisation) was named Word of the Year for 2005 in German-speaking Switzerland, following the company's decision to enter the Swiss market.^[8]