Aldi

ALDI

File:Aldi-Nord Logo.svgFile:Aldi-sued-logo.svgFile:Hofer logo.svg
Company type	German Multi-National
Industry	Retail (Grocery)
Founded	1913/1946
Headquarters	Essen (Aldi North/Nord) Mülheim an der Ruhr (Aldi South/Sued)
Key people	Theo Albrecht, Aldi Nord Karl Albrecht, Aldi Süd
Products	Mainly own branded, few larger brands
Revenue	37 billion USD (2004)
Website	Aldi International

, short for "ALbrecht DIscount", is a discount supermarket chain based in Germany and one of the largest retail chains worldwide. The chain is made up of two separate groups, ALDI North (operating as ALDI MARKT) and ALDI South (operating as ALDI SÜD), which operate independently from each other in specific market boundaries. The individual groups were originally owned and managed by brothers Karl Albrecht and Theo Albrecht; both have since retired. However, they are still Germany's richest men, earning an estimated € 1.5 billion per year. Aldi's German operations currently consist of Aldi North's 35 individual regional companies with about 2,500 stores in Northern and Eastern Germany, and Aldi South's 31 regional companies with 1,600 stores in Western and Southern Germany. Internationally, Aldi North operates in Denmark, France, the Benelux countries, the Iberian peninsula and Poland, while Aldi South operates in countries including Ireland, the United Kingdom, Austria and Slovenia (operating as Hofer), the United States 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. Aldi's main competitor, nationally and internationally, is Lidl.

History

First Aldi store in Essen, Germany

Earliest roots of the company trace back to 1913, when the mother of Karl and Theo Albrecht opened a small store in Essen-Schonnebeck. Their father was employed as a miner and later as a baker’s assistant. Karl was born in 1920, Theo in 1922. Theo completed an apprenticeship in his mother’s store, while Karl worked in a delicatessen. In the 1920s, Karl took over a food shop formerly run by F. W. Judt who already advertised to be the "cheapest food source". Karl also served in the German Army during World War II. After the end of World War II, the brothers took over their mother’s business (1946) and soon opened another retail outlet in the vicinity. By 1950, the Albrecht brothers already owned 13 stores in the Ruhr valley.

The brothers' idea, which was new at the time, was to subtract the then-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 in in regular intervals to claim their money back. The Albrecht brothers also rigorously removed merchandise that did not sell from their shelves, and squeezed out as much savings as possible 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 German mark 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, the number of outlets skyrocketing, especially after German reunification and the fall of the Iron Curtain. The Albrecht brothers retreated from their positions as CEOs in 1993 and gave most of their wealth to foundations.

Geographic distribution

File:Aldi in europe.png

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

Country	Name	Aldi group	Since	Outlets
Germany	Aldi	Nord	1946	2,400
	Aldi Süd	Süd	1946	1,610
Australia	Aldi	Süd	2001	140
Austria	Hofer	Süd	1968	380
Belgium	Aldi	Nord	ca. 1973	380
Denmark	Aldi	Nord	ca. 1981?	230
France	Aldi	Nord	1988	680
Ireland	Aldi	Süd	1998	34
Luxembourg	Aldi	Nord	ca. 1990	12
Netherlands	Aldi	Nord	ca. 1975	405
Portugal	Aldi	Nord	2006	5
Slovenia	Hofer	Süd	2005	29
Spain	Aldi	Nord	2002	130
Switzerland	Aldi Suisse	Süd	2005	15
United Kingdom	Aldi	Süd	1989	310
USA	Aldi	Süd	1976	805
total number of Aldi Nord stores				4,230
total number of Aldi Süd stores				3,322

In-store description

ALDI Nord interior

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).

Some brand name products are carried in certain markets however, for example HARIBO sweets in Germany, Vegemite in Australia or Marmite and Branston Pickle in the UK. In the US, major brand name products such as Oscar Mayer Bacon, are occasionally offered when on sale. This is strictly limited to very strong brands, though, and usually the result of the patronage not favouring Aldi's house-brand substitute over the brand product. Unlike most other stores, Aldi does not accept manufacturers' coupons.

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, 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.

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 "Be 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 fact, many have found the quality of Aldi products to be equal to and in certain cases even better than major brands.

In the USA, Aldi North 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. It is not Theo but his brother Karl Albrecht's Aldi South 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, but due to the store's low prices, many shoppers take this as an acceptable sacrifice.

Low price philosophy

File:Aldi-Markt Kamen.jpg

Aldi North in Kamen, Germany

ALDI South in Neusäß, Bavaria, Germany

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 till queues are generally accepted as 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 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, 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.)

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.

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 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 the UK, print and television ads appeared in mid-2005. All advertising is done in-house, and it is generally believed that Aldi never spent any money for an external advertising agency at all. Aldi does not have publicly listed telephones in stores to minimise the time tills are unused.

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.

Checkout system

Aldi in Bethlehem, PA, USA

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 North) or the actual price (Aldi South). 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 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, such as the Melbourne City store.

In Germany, the US, Australia, The Netherlands, Ireland, and the UK, Aldi does not provide free plastic shopping bags. Instead the customer can purchase various types of plastic/recyclable bags at the checkout to cart the goods out of the store. The carriers range in Australia ranging from 15¢ through to $2.50, in Ireland plastic bags are subject to a 15c levy, commonly referred to as the "Bag Tax". Bags cost 6c in Germany, and in the UK from a standard sized 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.

Reputation

ALDI in Hjørring, Denmark

In Germany, before the 1990's, Aldi shops were often ridiculed as being cheap shops selling low-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." However, being held in such low esteem by many did not seem to dent Aldi's profits. After German reunification, many German consumers discovered that the poor reputation of Aldi's products was undeserved. 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 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 has 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 a small player with a grocery market share of less than 3%.

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, though Aldi retains a relatively new presence, it already has gained a reputation for being patronised 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. The trend is starting to move to more favourable 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 German population are often rumoured to be found shopping at Aldi - this may have something to do with the comparative difference in the reputation of Aldi. This is also the case in the UK - most Germans seem to know exactly where their nearest Aldi store is located.

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 domestic Maestro debit cards). Debit cards are also accepted in the USA, the UK, Austria, Belgium, Denmark, France, the Netherlands, Switzerland, Ireland and Australia. 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 at some locations. 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 ubiquitous in Germany – is requiring a coin to use a shopping cart. When the coin is inserted, the trolley is unlocked from the other trollies. 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 car park or further afield. This also may help a little to prevent the trollies from being stolen. Further incentive, in a stroke of corporate altruism, is that by encouraging their patrons to return their carts to the corral area they prevent the damage loose carts do to vehicles.

Aldi stores worldwide are approximately the same size - 800 to 1,000 square metres. The company's stores in Germany are similar in size to those of competing supermarkets, and can often be found near 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 pitched 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.

Some Aldi stores have limited opening hours (eg. until 18:30 on week nights and 16:00 Saturdays), such as were restricted by law in Germany until these laws were relaxed somewhat in 1996 and 2004. Most of its German outlets, particularly those near shopping centres, now stay open until 20:00. The recent abolition of the national law on closure times and consequent liberalisation to a free-for-all six day week schedule in most states of Germany has had little effect on Aldi so far. 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, like most other British supermarkets, now open on Sundays between 10:00 and 16:00). Aldi stores in Australia generally open from 09:00 to 19:00 weekdays and open both Saturday and Sunday until 17:00/18:00.

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.

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. After a few days Aldi subdued to the public pressure and declared in the future it would only sell wood with the FSC certificate, which stands for sustainable forestry.

Aldi Talk

On 7 December 2005, based on their well known brand, Aldi (both North and South) 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 5c (now 4c) per minute/SMS to other Aldi Talk customers and 15c (now 14c) to landlines and other mobile phones. This offer at first was a two-week limited time offer, but has been available permanently on a "starter set", which has a SIM card and 10 euro worth of credit since early 2006..

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

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.

• In Germany Aldi is occasionally light-heartedly called Feinkost Albrecht (approximate translation: "Albrecht's Fine Foods" or " Albrecht Delicatessen").

• In August 2006, the Aldi South logo was slightly changed during the fitout of the new central Melbourne store: [1]

• Senor Cardgage, a character from Homestarrunner.com, is almost never seen without his Aldi bag filled with mysterious contents.

• 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).

See also

• Trader Joe's -- A US speciality store chain bought by Theo Albrecht in 1988

Competitors

• Lidl (5,000 stores)
• Marks and spencer (UK)
• Netto (1,200 stores)
• Woolworths/Safeway (Australia)
• Coles (Australia)
• BI-LO (Australia)
• Pauls ma.. Ireland
• Franklins (Australia)
• Food for Less (Australia)
• Tesco (UK, Ireland)
• Sainsburys (UK)
• Kwiksave (UK only)
• Save-A-Lot (1,150 stores, USA only)
• Marc's (51 stores, Ohio, USA)
• Norma (France, Germany)
• Penny-Markt (Europe)
• Plus
• Asda (UK)
• Dia (Spain, Greece, Portugal, France (European Discount))
• Morrisons (UK)
• Super H Mart (Eastern U.S.)
• Wal-mart (U.S., Canada, and UK)
• Sam's Club (U.S. and Canada)
• Costco (U.S. and Canada)
• 7 Eleven (U.S. and Canada)

External links

Company sites

• Aldi International (with links to all of Aldi's international websites)

Non-Aldi sites

• Yahoo! - ALDI Group Company Profile
• Unofficial ALDI - Medion Hardware Support Forum