[Distribution Trend]German supermarket ‘Aldi’ growth

 

*Logo at a German discount store ‘Aldi’ store in Illinois, USA./AFP Yonhap News

The secret behind the German supermarket ‘Aldi’ that is shaking up the American distribution industry

*Source_Chosun Economy>WEEKLY BIZ

Aldi is the fastest-growing retail chain in the United States over the past four years. Last year, sales in the U.S. amounted to $18.2 billion (about 24 trillion won). In terms of the number of stores, it has 2,400, making it the third largest distribution company in the United States, following Walmart (4,600) and Kroger (2,800). Last month, Aldi acquired two additional market chains that operate 400 stores in the southern United States. The U.S. is racing through the ‘retail industry disaster era’ in which department stores and large supermarkets are closing.

◇Focus only on price

Aldi's mission is to provide low prices. Many people say that although Aldi is noticeably cheaper, the quality is not significantly lower. Aldi uses a ‘no-frill’ strategy that focuses only on price. Reduce unnecessary costs. There are no staff to organize shopping carts or pack items. Customers must insert 25 cent coins to rent the cart, and purchase a shopping cart separately. This is a measure to prevent cart loss and reduce labor costs, and although it is familiar in Korea and Europe, it is still an unfamiliar sight in the United States.

Not only that, there is no one neatly displaying products or shouting ‘last sale’. Items are stacked in boxes on shelves, and barcodes are attached in several places to shorten checkout time. Cashiers scan products at more than twice the speed of regular grocery stores. There are an average of 6 people working per store, but only 2 employees guard the store during the day. Compared to nearby supermarkets, business hours are about 6 hours shorter. To save on copyright fees, the store does not even play music.

◇Even though it is small, it has everything.

Aldi stores are small. The average area is 1,100 m2 (330 pyeong), which is less than one-tenth of Walmart (16,500 m2) or Costco (13,500 m2). As such, the number of products handled is small. Aldi has 1,400 types of products, but compared to Wal-Mart, which carries 100,000 types of products, it is at the level of a ‘small store’. However, it has almost all the products that the average consumer needs. There are 217 types of milk available at Walmart, but only 14 types at Aldi. For people who need ‘just milk’ rather than special milk, there are 14 different types of milk to choose from. Small stores have the effect of lowering labor, rent, and inventory costs, but they can also reduce consumer movement. You don't have to walk 10,000 steps like at other large supermarkets.

◇Going to Aldi in a Benz

Waves of inflation also helped Aldi grow. This is because even the wealthy are tired of high prices and are looking for Aldi. These days, luxury cars such as Mercedes-Benz and Porsche are also visible in Aldi parking lots in the United States. The Wall Street Journal (WSJ) said, “Paying $8 for a box of eggs is outrageous even for the wealthy,” and added, “Even the top 1% of consumers scour discount stores in search of cheap products.” According to a survey of 50,000 people by U.S. market research company Morning Consult last June, 45% of respondents with an annual income of more than $100,000 responded that they would look for low-priced discount stores.

 

Do you know Aldi, the ‘European version of Daiso’?

*Source_Naver Post

*Photo source_Aldi website

It is easy to understand that Aldi is the European version of ‘Daiso’. The difference is that Daiso, which focuses on industrial products, carries fresh foods as an assortment, while Aldi focuses on fresh foods.

  Aldi’s secret to success ‘Remove the price bubble’ When you go to an Aldi store, the hallways are straight and straight. Products are often displayed in whole boxes. If the hallways are winding and products are displayed one by one, it will take a lot of time and there will be a lot of employees, but this is a measure to reduce this. Tastings and promotional events are very rare at Aldi. This is because of the philosophy that we must focus on the essentials.

Aldi’s secret to success ‘Reduce the number of products.’ Aldi sells about 1,500 to 3,500 items per store. It is 1/10th of Tesco. In terms of manufacturing, it can be understood that prices have been lowered through mass production of small varieties. 90% of Aldi's sold items are PB products that Aldi orders from its partners and sells under the Aldi brand. Even in Korea, PB products are sold cheaper than regular products.

Aldi’s secret to success ‘Be sensitive to change.’ Aldi actively utilizes the JIT (Just in time) method, which orders products whenever they are needed and supplies them at the right time. If you store products in a warehouse and sell them, there are no management costs. It is said that they were able to quickly respond to market changes by reducing these costs and introducing a method of selling in accordance with the needs of consumers.

Aldi’s secret to success ‘Quality is fundamental’ Aldi does not have a wide variety of products, but quality is regularly checked and reflected in the store. There is a double guarantee system. While supplying most products at the lowest prices in the industry, Aldi promises high quality to its customers, and provides exchanges or refunds if customers are not 100% satisfied with Aldi's food for any reason.

 The reason why rich Americans are also addicted to the affordable supermarket Aldi [Tea Times]

*Source: Tea Times TV YouTube

Entrepreneurs who experienced inflation... “Necessities for living at the lowest price“

Aldi boasts such an enormous impact that it is said to change ‘grocery shopping habits’ wherever it opens a store. This is because they provide good quality products at low prices. To put it mildly, in Germany, Aldi's home country, the expression 'cost-effectiveness' (price-performance ratio) is good and is called 'Aldi-like' (Aldisierung).

No branding, no decoration, no tasting... Reduced costs are returned to customers

Aldi works directly with manufacturers in the countries it operates in and fills its shelves with PB products bearing the Aldi brand. Generally, more than 90% of stores are filled with PB products, and in the US and UK stores, the proportion of PB products reaches 95%. Thanks to this, we can cut out all marketing costs and brand margins that are unconditionally included in famous brand products. Additionally, as the shelves are filled with PB products, the number of items can be drastically reduced. Each store displays an average of 1,500 products. Walmart has an average of 35,000 items. Since there are few items, it is easy for the supermarket to manage inventory and display items. It is also possible to regularly check product quality and popularity and reflect them on the shelves.