Aldi

ALDI

Industry	Retail (grocery)
Founded	1913
Headquarters	Essen, Germany (Aldi Nord) Mülheim an der Ruhr, Germany (Aldi Süd)
Key people	Theo Albrecht, Aldi Nord Karl Albrecht, Aldi Süd
Products	Mainly own branded, few larger brands
Revenue	US$ 58 billion (2008) according to Deloitte[1]
Website	www.aldi.com

ALDI, short for "Albrecht Discount", is a discount supermarket chain based in Germany. The chain is made up of two separate groups, ALDI Nord (North - operating as ALDI MARKT) and ALDI Süd (South - operating as ALDI SÜD), which operate independently from each other within specific market boundaries. The individual groups were originally owned and managed by brothers Karl Albrecht and Theo Albrecht; both have since retired and Theo has died. However, Karl is still Germany's richest man and Theo was Germany's second richest man. Aldi's German operations currently consist of Aldi Nord's 35 individual regional companies with about 2,500 stores in Western, Northern and Eastern Germany, and Aldi Süd's 31 regional companies with 1,600 stores in Western and Southern Germany. Internationally, Aldi Nord operates in Denmark, France, the Benelux countries, the Iberian peninsula and Poland, while Aldi Süd operates in countries including the United States, Ireland, the United Kingdom, Hungary, Greece, Switzerland, Austria, Slovenia (operating as Hofer in Austria and Slovenia) and Australia. According to a survey conducted in 2002 by the German market research institute Forsa, 95% of blue-collar workers, 88% of white-collar workers, 84% of public servants and 80% of self-employed Germans shop at Aldi.^[2] One of Aldi's direct competitors, both nationally and internationally, is Lidl.

History

Albrecht storefront in Essen, West Germany 1958

First Aldi store in Essen, modern Germany

The earliest roots of the company trace back to 1913, when the mother of Karl Albrecht and Theo Albrecht opened a small store in a suburb of Essen. Their father was employed as a miner and later as a baker’s assistant. Karl Albrecht was born in 1920, Theo in 1922. Theo completed an apprenticeship in his mother’s store, while Karl worked in a delicatessen. Karl Albrecht took over a food shop formerly run by F. W. Judt who already advertised to be the "cheapest food source". Karl Albrecht also served in the German Army during World War II. In 1946, the brothers took over their mother’s business and soon opened another retail outlet nearby. By 1950, the Albrecht brothers owned 13 stores in the Ruhr Valley. The brothers' idea, which was new at the time, was to subtract the legal maximum rebate of 3% before sale. The market leaders at the time, which often were co-operatives, required their customers to collect rebate stamps, and to send them at regular intervals to claim their money back. The Albrecht brothers also rigorously removed merchandise that did not sell from their shelves, and cut costs by not advertising, not selling fresh produce, and keeping the size of their retail outlets as small as possible.

When the two brothers split the company in 1960 over a dispute whether they should sell cigarettes at the till or not, they owned 300 shops with a cash flow of DM 90 million per year. In 1962, they introduced the Aldi brand name. Both groups are financially and legally separate since 1966, though they describe their relationship as a "friendly relation"; they will also occasionally appear as if they were a single enterprise, for example with certain house brands, or when negotiating with contractor companies. Aldi expanded internationally in the 1970s and 1980s, experiencing a rapid expansion in the number of outlets after German reunification and the fall of the Iron Curtain. The brothers retired as CEOs in 1993 and gave most of their wealth to foundations.

National business organization

The Aldi Nord group currently consists of 35 independent regional branches with approximately 2,500 stores. Aldi Süd is made up of 31 companies with 1,600 stores. The border between their territories runs from the Rhine via Mülheim an der Ruhr, Wermelskirchen, Marburg, Siegen and Gießen eastwards up to slightly north of Fulda. Former East Germany is completely served by Aldi Nord, save for a single Aldi Süd store in Sonneberg, Thuringia that is associated with a Bavarian regional office. The regional branches are organised as limited partnerships with a regional manager for each branch who reports directly to the head office in Essen (Aldi Nord) or Mülheim an der Ruhr (Aldi Süd). The regional distribution centres are usually located away from urban areas, but always near an autobahn to facilitate transporting the merchandise to the individual stores. Aldi Nord, for example, has distribution centres in Bargteheide, Barleben, Beucha, Beverstedt, Datteln, Essen, Greven, Hann. Münden, Hemmoor, Hesel, Herten, Horst, Hoyerswerda, Jarmen, Lehrte, Lingen, Minden, Nortorf, Radevormwald, Rinteln, Salzgitter, Scharbeutz, Schloß Holte, Schwelm, Werl and Weyhe. The coffee roaster of Aldi Nord is also located in Weyhe.

Internationally

The Aldi group operates about 8,210 individual stores worldwide. A new store opens every week in Britain alone.^[3]

Aldi Nord is responsible for the markets in Belgium, the Netherlands, Luxembourg, France, Spain, Portugal and Denmark. Aldi Süd caters to the markets of the United States, Austria, the United Kingdom, Ireland, Australia, Switzerland and Slovenia. Aldi Süd currently is expanding in Switzerland, where the first stores opened in 2005. Hungary, Greece and Poland are on the short list of countries for further expansion, where the first stores opened in 2007.

Whilst Aldi Nord has long renamed its Dutch and Belgian subsidiaries Combi and Lansa to the ALDI Markt/Aldi Marché brand, Aldi Süd tries to keep a regional appearance. Therefore, Aldi Süd explicitly brands its outlets as Aldi Süd in Germany, Aldi Suisse in Switzerland and Hofer in Austria and Slovenia.

Geographic distribution

Distribution of Aldi within Germany (the so-called Aldi-equator)

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

Country	Name	Aldi group	Since	Outlets
Germany	Aldi	Nord	1946	2,400
	Aldi	Süd	1946	1,720[4]
Australia	Aldi	Süd	2001	200[5]
Austria	Hofer	Süd	1968	410[4]
Belgium	Aldi	Nord	1973	380
Denmark	Aldi	Nord	1977	244
France	Aldi	Nord	1988	680
Greece	Aldi	Süd	2008	25[6]
Hungary	Aldi	Süd	2008	61[7]
Ireland	Aldi	Süd	1998	70
Luxembourg	Aldi	Nord	1990	12
Netherlands	Aldi	Nord	1975	406
Poland	Aldi	Nord	2008	42
Portugal	Aldi	Nord	2006	13
Romania[8]	Aldi	—	2007	—
Slovenia	Hofer	Süd	2005	40[4]
Spain	Aldi	Nord	2002	130
Switzerland	Aldi Suisse	Süd	2005	100[4]
United Kingdom	Aldi	Süd	1989	422[9][10]
USA	Aldi	Süd	1976	1,000[11]
total number of Aldi Nord stores				4,287
total number of Aldi Süd stores				3,923
total number of all Aldi stores				8,210

Business practice

Many Aldi practices are common in German supermarkets but largely unique to Aldi in markets such as the US. 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 (since 2004, German stores accept domestic Girocard debit cards). Debit cards are also accepted in the USA, the UK, Austria, Belgium, Denmark, France, Portugal, Spain, the Netherlands, Switzerland, Ireland, Australia and Slovenia.

Aldi generally does not accept credit cards, though Aldi Australia accepts MasterCard and Visa for an additional 1% surcharge. Aldi now accepts credit cards free of charge in both Wales and Scotland in the UK; however, these are currently only being accepted as a trial. Credit cards are not accepted in England, Ireland, or the U.S.

Another practice at Aldi stores in Europe, Australia, the United States and many parts of Canada, is requiring a coin, or a reusable coin-sized token which may be purchased from Aldi, to use a shopping trolley. When the coin or token is inserted, the trolley is unlocked from the other trolleys. When the cart is returned, the customer is refunded their coin, so in effect this costs the customer nothing other than the time to return the cart. In contrast, other stores in the US commonly have employees return the carts left in the parking lot.

Almost all of Aldi's German outlets are open until 8 PM (20:00) six days a week. Aldi stores in the U.S. generally open between 9 AM and 10 AM, and close at 8 PM (20:00) weeknights, 7 PM (19:00) Saturdays, and 5 PM (17:00) on Sundays. Stores in the UK close at 19:00 or 20:00 on weeknights, some earlier on Saturday. Aldi stores in England and Wales, like most other supermarkets, now open on Sundays between 10:00 and 16:00, while stores in Scotland, where Sunday trading laws are unregulated, open at times only slightly different from weekdays. Aldi stores in Australia generally open from 09:00 to 19:00 weekdays and open both Saturday and Sunday until 17:00/18:00. In Australia, Aldi was the first supermarket to routinely apply unit price and is the only supermarket to label its products as suitable for vegetarians. In Ireland stores open between 09:00 to 20:00 Monday to Wednesday, 09:00 to 21:00 Thursday and Friday, 09:00 to 19:00 Saturday and 11:00 to 19:00 on Sunday.

In-store layout

ALDI Nord interior

Shelving in an Aldi store in Australia

Aldi specialises in staple items such as food, beverages, toilet paper, 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, although often only one. This increases the numbers of sales for each article also allows Aldi stores to be smaller than supermarkets which cover the same range of products but with more diversity. This practice also allowed Aldi to avoid the use of price tags, even before the introduction of bar code scanners (see below).

However, some brand-name products are carried in certain markets, for example, HARIBO sweets in Germany, Marmite and Branston Pickle in the UK or Vegemite and Milo in Australia. In the US, major brand-name products such as Oscar Mayer Bacon, are occasionally offered as 'special buy.' The 'special buy' program (formally called the 'special purchase') are name-brand items that Aldi has received at a special price from the vendor and can offer for a reduced price. Unlike most other stores, Aldi does not accept manufacturers' coupons. Some stores in the US did experiment with a store coupon ($10 off a $25 purchase) with much success.

In addition to its 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, regularly put up for sale are clothing, toys, flowers, gifts. Specials are only available in strictly limited quantities and for a limited time frame (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.^[12]

Aldi is the largest wine retailer in Germany.^[13] Aldi mainly sells exclusively produced, custom-branded products (often identical to and produced by major brands^[14]) with brand names including "Grandessa" and "Fit & Active". American Aldi stores also feature bargain-priced, gourmet foods imported from Germany. This is also the case in Australia and the UK.

In the USA, Aldi Nord CEO Theo Albrecht started a family trust that owns the Trader Joe's chain of specialty grocery stores, which is separate from both Aldi corporations. Trader Joe's has no corporate relationship to Karl Albrecht's Aldi Süd, which conducts Aldi's operations in the United States.

Low price policy

Aldi Nord in Kamen, Germany

ALDI Süd in Trier, Germany

ALDI in Conder, Australian Capital Territory

Aldi in Beeston, Leeds, UK

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 (in cardboard boxes, shaped so customers can easily pick them up) on offer are parked alongside the aisles, and customers picking up products will gradually empty them (since ALDI charges for bags, the empty cardboard boxes are typically removed by customers and used as shopping/carrying bags). When all items on a pallet have been sold, it is replaced. Multi-tiered shelves are also utilized in many US Aldi stores, sporting a wide array of easily identifiable cases of product. 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 till queues are generally accepted as part of daily life. However, due to the efficient checkout system, a long queue does not necessarily reflect longer waiting times than in other supermarkets. In Ireland and Great Britain, Aldi operates the one-past-the-belt system, whereby each time there is a trolley and a customer beyond the conveyor belt, another till is systematically opened, until all the tills are open. Employees are expected to alternate between checking customers out and store maintenance, such that all employees focus on that during peak hours. Conversely when customer traffic is low, only one employee will check people out while the rest perform other duties required to run the store (stocking, cleaning, etc.).

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 consumers. Aldi has carved its own niche with this approach; while some 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, somewhat similar to Wal-Mart's style of parking pallets on floors with pre-prepared displays. ("Top quality at incredibly low prices", "smarter shopping" and "Spend a little, live a lot" are Aldi's marketing slogans)

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 (something that was later proven to be true by the German Federal Office for Statistics). 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.

Advertising policy

Aldi has a policy in Germany of not advertising, apart from a weekly newsletter of special prices called Aldi informiert ("Aldi informs" is a literal translation but "Aldi News" is a closer approximation in English) that is distributed in stores, by direct mail, and often 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 television commercials (in some areas). In the UK, print and television ads have appeared since mid-2005. In Germany, all advertising isn't done in-house, but it is generally believed that Aldi has never spent any money for an external advertising agency at all.^[2] This is not the case in the U.S. however. There, MagNet Media, a division of NSA Media of Downers Grove, IL currently handles agency-of-record duties.

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. As of June 2009, they have started a television commercial campaign advertising Aldi's slogan "Smarter Shopping"

With the more recent success of supposedly upmarket rivals such as Marks and Spencer marketing the quality of their produce, the UK advertising by Neil Armstrong, 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 Woman's Own or Good Housekeeping magazines, in an effort to underline the quality of the food.

Checkout system

Aldi in Bethlehem, PA, using an exterior design common in U.S. Market Aldi stores

Aldi's checkout procedure is highly standardised, with checkout operators sitting down in swivel chairs, passing products through a two-sided barcode scanner. Some products have 4 or 5 separate yet identical barcodes covering several sides of the packaging to speed this procedure. Products could be scanned twice because of the prevalence of barcodes on products, so to counter this Aldi has a 1 second delay, meaning the same barcode can't be scanned twice in under 1 second. A worker must scan a fixed number of items per productive hour. If there are no customers at the till the cashiers switch the till to standby effectively 'stopping the clock' then starting it again when a customer approaches. Aldi does not have publicly listed telephones in stores to minimise the time tills are unused.

Aldi was, however, a latecomer to bar code 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 North) or the actual price (Aldi South). This practice still exists to an extent in the UK and US, with staff needing to memorise around 100 fruit and veg product numbers ranging from 1 to 100. An advantage of this was that the cashiers could already type in the prices of all the articles on the conveyor 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 trolley - the customer is expected to bag groceries away from the cash-desk. In most countries, Aldi does not offer hand baskets. In Denmark, hand baskets are available in all Aldi stores and in Australia they are offered in some stores.

In many countries, including most of Europe, the US, and Australia, Aldi does not provide free plastic shopping bags. Instead the customer can purchase various types of plastic/reusable bags at the checkout to cart the goods out of the store. Aldi encourages customers to bring their own bags. Many US and Australian customers use empty boxes directly from the pallets in the store for packaging their groceries.

Reputation

ALDI in Hjørring, Denmark

Originally Aldi stores were often ridiculed as being cheap shops selling low-quality goods, and that Aldi's customers were all poor people who couldn't afford to shop elsewhere ^[15]. However, being held in such low esteem by many did not seem to dent Aldi's profits. Gradually many German consumers discovered that the poor reputation of Aldi's products was either undeserved or economically justifiable.^[16] This shift in public perception was boosted by actions like a series of cookbooks that only used Aldi ingredients, which led to the emergence of a kind of Aldi fandom into parts of 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 the UK, while it is still a small player with a grocery market share of less than 3%, its importance along with that of continental no frills competitor Lidl is growing. Also, Aldi is aggressively recruiting management staff at top UK universities.

In the United States, like most US supermarkets, Aldi stores in many American states accept public assistance debit-style cards as payment.

Opening Day at Glenfield Park, New South Wales

In many areas of Australia, Aldi filled a void in the discount supermarket business that arose when the popular discount grocery chain Franklins ceased trading in 2002, except in New South Wales. For example in Queensland Aldi aims to have 50 stores across the state by the end of 2008 in areas with a population of about 20,000 residents. On 17 December 2008, Aldi opened its 200th Australian store, with those 200 located in Victoria, New South Wales and Queensland. ^[17]

Criticism

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.^[18]

In 2004, Aldi sold garden furniture from Indonesian Meranti wood in Germany. Because it was not able to show that it was sourced legally (70% of Indonesian timber is logged illegally), environmental organisations put pressure on Aldi to withdraw the wood from the market.^[19] After a few days Aldi bowed to the public pressure and declared in the future it would only sell wood with the FSC certificate, which promotes sustainable forestry.^[20]

Over 200 store managers in the United States are filing charges against unfair labor practices. They are claiming they were illegally classified as exempt from overtime pay, receiving a fixed salary regardless of the actual number of hours worked. The plaintiffs claim they did not spend most of their time managing, rather their time was spent stocking shelves, cleaning spills, and ringing out customers. Store managers do not have management responsibility such as hiring, firing, nor promoting employees.[1]

Aldi Talk

Aldi also has a mobile virtual network operator in Germany, Belgium and the Netherlands, called Aldi Talk.

Shop ALDI Smart

On March 26, 2008, In the US, Aldi debuted new TV commercials and a new website called "Shop ALDI Smart". It even became a new corporate slogan replacing "Incredible Value Every Day!" However, the old slogan is still seen in most stores. It also talks about "The Double Back Guarantee." One of the new TV Ads includes Aldi shoppers singing a jingle in a broadway scene.

Aldi in Popular Culture

• "Aldisierung" (Aldisation) was named Word of the Year for 2005 in German-speaking Switzerland, following the company's decision to enter the Swiss market.^[21]
• In Germany Aldi is occasionally light-heartedly called Feinkost Albrecht (approximate translation: "Albrecht's Fine Foods" or " Albrecht Delicatessen").^[22]
• From its opening in Sydney in 2001, the Aldi Süd logo was slightly changed to remove the Süd part of the name: [2]
• Karl and Theo Albrecht's mother has been reported to say "Je schlechter es den Menschen geht, desto besser geht es uns" (The worse off the people are, the better off we are).^[2]
• In the UK during September 2008 Aldi have introduced a TV advertising campaign featuring popular TV chef Phil Vickery demonstrating dishes that can be produced from Aldi products.
• In April 2009 Aldi UK launched its 99p items offer to fight back against other supermarkets with 100s of items costing 99p or less. It followed this with a campaign highlighting low prices on fruit and vegetables, with a "Super Six" offer featuring a rolling selection at a single low price each month. Aldi also claim in-store to save its customers £23 on average on a weekly shop.
• The Aldi store in Springdale, Arkansas has been featured on two episodes of The Learning Channel's 17 Kids and Counting (the Duggar family regularly shops at the store).
• Senor Cardgage in Homestar Runner sometimes carries around an Aldi bag.^[23]

See also

• Trader Joe's -- A US speciality store chain bought by Theo Albrecht in 1978
• Save-A-Lot -- Aldi's main competitor in the US limited assortment, operating over 1,200 stores
• Lidl -- Aldi's main competitor in Europe, operating over 8,500 stores

References

External links

Company sites

• Aldi International (with links to all of Aldi's international websites)
• Aldi Careers (Aldi's US careers website)

Non-Aldi sites

• Yahoo! - ALDI Group Company Profile
• Unofficial ALDI - Medion Hardware Support Forum
• International ALDI archives - History of ALDI special buys (dead link)
• Complete Aldi Price List Scan (May vary slightly over time and by location) (dead link)
• Aldi Product Review Customer discussions about Aldi products. Focuses mainly on stores and products in the USA.
• Australian & New Zealand discussion forums for Aldi products.
• BENELUX discussion forums for Aldi products.
• Aldi opens in Dallas with big hopes, small stores - Dallas Morning News, March 18, 2010
• KTVT/11 story of Aldi's arrival in Dallas - March 15, 2010 (with video)

Supermarkets in the United Kingdom Big five Tesco · Asda · Sainsbury's · Morrisons · The Co-operative Food (including Somerfield) Up-market chains Holland and Barrett · Marks & Spencer · Waitrose Discount chains Lidl · Aldi · Netto · B & M · Home Bargains · Quality Save Frozen Specialists Farmfoods · Iceland · Jack Fulton · Heron Foods Regional Booths · Dunnes Stores · Filco · Haldanes · Shoprite Online Ocado Other Best-One · Budgens · Costcutter · Happy Shopper · Jones Convenience Stores · Londis · Mace · McColl's · Nisa-Today's · Premier Stores · SPAR · ...instore (and Poundstretcher) · Poundland · 99p Stores See also List of supermarket chains in the United Kingdom