How a cheap, brutally efficient grocery chain (Aldi) is upending U.S. supermarkets

[BleedGopher]

per CNN:

Running a supermarket in America has never been harder.

Profits are razor thin. Online shopping and home delivery are changing the way people buy their food. Dollar stores and drugstores are selling more groceries. Pressures are so intense that regional chains like Southeastern Grocers, the owner of Winn-Dixie and Bi-Lo, filed for bankruptcy. Large companies increasingly control the industry, which had long operated as a dispersed network of smaller, local grocers. And even Walmart — the largest player of all — faces new competition from Amazon, which bought Whole Foods in 2017 for almost $14 billion.

But when Walmart’s US CEO Greg Foran invokes words like “fierce,” “good” and “clever” in speaking almost admiringly about one of his competitors, he’s not referring to Amazon. He isn’t pointing to large chains like Kroger or Albertsons, dollar stores like Dollar General or online entrants like FreshDirect and Instacart.

Foran is describing Aldi, the no-frills German discount grocery chain that’s growing aggressively in the United States and reshaping the industry along the way.

New customers may be jolted at first by the experience of shopping at an Aldi, which expects its customers to endure a number of minor inconveniences not typical at other American grocery stores. Shoppers need a quarter to rent a shopping cart. Plastic and paper bags are available only for a fee. And at checkout, cashiers hurry shoppers away, expecting them to bag their own groceries in a separate location away from the cash register.

But Aldi has built a cult-like following. When it enters a new town, it’s not uncommon for hundreds of people to turn out for the grand opening. The allure is all in the rock-bottom prices, which are so cheap that Aldi often beats Walmart at its own low-price game.

"I am willing to do the extra work because the prices are amazing,” said Diane Youngpeter, who runs a fan blog about the grocer called the Aldi Nerd and an Aldi Facebook group with 50,000 members. “There’s a lot of Aldi nerds out there,” she said. “I didn’t realize that there were so many of us.”

https://www.cnn.com/interactive/2019/05/business/aldi-walmart-low-food-prices/index.html

Go Gophers!!

 

[Gophers_4life]

Interesting facts: Aldi is actually two companies, based on when the family company split back in Germany over family disagreements.

One of those companies then purchased Trader Joe’s and owns it today. The other company owns the Aldi stores that we see in the States. But in Europe, there are two different Aldi’s.

 

[short ornery norwegian]

Honestly, I'm old enough and lazy enough that I would rather pay a little more and have the amenities included. If I'm going to the grocery store, I don't want to worry about "gee, do I have a quarter for the grocery cart?" or worry about bringing along a grocery bag. If I go to a Wal-Mart, I will choose the full-service checkout line instead of the 'scan your own stuff' line, even if that means I get stuck waiting for the people in front of me who are buying enough stuff for a small country.

And, in my case, I am not a 'stock-up' type of shopper. I live in a smaller town (4700 people) with one grocery store (Hy Vee) and I tend to stop in there at least 2 or 3 times a week to pick up a few odds and ends. I don't go in there and fill up a shopping cart with $100 worth of food. My typical trip to the store is more like $15 or $20 at a time. Of course, when you stop in, you always tend to buy more than you planned - because you think "I need that" or "I want that."

 

[MennoSota]

Aldi is great. Very good fruits and vegetables. Cheapest gallon of milk around. Eggs are inexpensive. Nice juices and bread aisle.
I keep a quarter in the car for the cart (You get the quarter back when you bring back the cart to the queue.) and I bring my own bags. Also, they leave empty boxes around so you can grab a box if you forget a bag.
Plus, the stores aren't huge so you get in and get out. Finally, being one who hates coupons, I don't need them at Aldi. Just buy what you need and get out. Quick, clean and efficient...the German way.

 

[#2Gopher]

Do they have organic foods including milk and grass fed beef meats for sale?

 

[GophersInIowa]

Aldi is great. Very good fruits and vegetables. Cheapest gallon of milk around. Eggs are inexpensive. Nice juices and bread aisle.
I keep a quarter in the car for the cart (You get the quarter back when you bring back the cart to the queue.) and I bring my own bags. Also, they leave empty boxes around so you can grab a box if you forget a bag.
Plus, the stores aren't huge so you get in and get out. Finally, being one who hates coupons, I don't need them at Aldi. Just buy what you need and get out. Quick, clean and efficient...the German way.

My experience with most of the discount grocery stores is that the produce is pretty bad. Aldi might be the exception. We have a grocery store close to us (not an Aldi) that is cheaper with most everything but the produce sucks so we go to one that is a little further away and is a little more expensive.

 

[MennoSota]

My experience with most of the discount grocery stores is that the produce is pretty bad. Aldi might be the exception. We have a grocery store close to us (not an Aldi) that is cheaper with most everything but the produce sucks so we go to one that is a little further away and is a little more expensive.

I have two different Aldi stores within 3 miles of my place. Both have excellent produce. Perhaps the best grapes and strawberries I have ever purchased from a store.
That's my experience. Perhaps others have not fared as well.

 

[Section2]

I've been to Aldi once. I will have been to Aldi once.

 

[MennoSota]

I've been to Aldi once. I will have been to Aldi once.

Did you dislike the food or did you dislike the inconvenience of needing to rent a cart and buy bags?

 

[Section2]

Did you dislike the food or did you dislike the inconvenience of needing to rent a cart and buy bags?

Just didn't like the experience. Didn't like the flow, felt cheap. Can't remember if the food tasted good or bad, but food's one thing I don't mind paying a little more for.

 

[MennoSota]

Just didn't like the experience. Didn't like the flow, felt cheap. Can't remember if the food tasted good or bad, but food's one thing I don't mind paying a little more for.

Experience.
It's interesting that upper-middle class and wealthy judge their preference by what they experience rather than by value and cost-benefit.
I have no idea what your income is, I'm just stating that your comment reminds me that people go places based upon different cultural values.

 

[Section2]

Experience.
It's interesting that upper-middle class and wealthy judge their preference by what they experience rather than by value and cost-benefit.
I have no idea what your income is, I'm just stating that your comment reminds me that people go places based upon different cultural values.

True. I shop all over the place, Cub, higher end stores, and Costco. I would rather buy more expensive fresh food, and I believe the quality is higher.

 

[MennoSota]

True. I shop all over the place, Cub, higher end stores, and Costco. I would rather buy more expensive fresh food, and I believe the quality is higher.

This would be a good project for Mythbusters. [emoji16]

 

[jamiche]

An Aldi opened probably 12-15 years ago near where I live. I went in the store one time and I haven’t returned. Everything in there was crap and I thought they were ripping off poor people by offering substandard meat, produce, dairy and packaged goods. My understanding is that their offerings have improved, but I don’t have a reason to go back.


Sent from my iPad using Tapatalk

 

[cncmin]

True. I shop all over the place, Cub, higher end stores, and Costco. I would rather buy more expensive fresh food, and I believe the quality is higher.

I had a similar experience....went to an Aldi's once, and that's about how many times I expect to be in an Aldi's. Whether the food was good or not, the whole experience made it appear to be of low quality. Their lack of choices for items was also poor. Trader Joe's, on the other hand, is decent.

 

[howeda7]

I also went once. Generics are fine for some things, but I don't want them exclusively. And their limited selection makes it almost impossible to do get everything there. Going to multiple stores to save a few $ is not worth it, personally.

 

[Costa Rican Gopher]

Do they have organic foods including milk and grass fed beef meats for sale?

Bro, save some chicks for the rest of us.

 

[diehard]

Do they have organic foods including milk and grass fed beef meats for sale?

My wife loves Aldi. I don't. I buy direct from local farmers or sometimes at Lydl. Aldi's produce is organic. I would say you do not need certified organic meat. Grassfed is what you want and it will be raised to the same standards as organic. Milk is a totally different matter. For best health you want high fat non pasteurized non-homogenized milk. Nature milk. Grass fed and grassfed dairy products. That is tough to do in Minnesota because of the winters and high energy requirements. In any case avoid anything that has been exposed to glyphosate.

 

[Livingat45north]

I think Aldi has a very different model than the other stores (e.g..,Cub). Cub rents space to food producers. They don't make money directly by selling food, they make money by leasing shelf space to producers. If you want to get your brand of BBQ sauce onto Cub's shelves, you can pay a fee to Cub and it'll get put on the shelf. If it doesn't sell, Cub doesn't care too much since they're not out any money, you still owe them for leasing that shelf. You'll pay more for an eye level shelf, and even more for an end cap. Aldi on the other hand purchases food from the resellers at wholesale, sells the food, and keeps the margin between the two as profit. Cub's incentive is to make their stores as big as possible and thereby lease as much shelf space as they can. That's why there's 20 different brands of toothpaste on the shelves. Aldi's incentive is to keep their overhead small, which is why their stores are much smaller, the food items are left in the shipping containers, and they often only have one size and one type of product (e.g., if you want green olives, you only have one type of jar to select). Aldi also has far more control over the food items, for example, a few years ago they mandated that their food providers be "bee friendly".

 

[howeda7]

I think Aldi has a very different model than the other stores (e.g..,Cub). Cub rents space to food producers. They don't make money directly by selling food, they make money by leasing shelf space to producers. If you want to get your brand of BBQ sauce onto Cub's shelves, you can pay a fee to Cub and it'll get put on the shelf. If it doesn't sell, Cub doesn't care too much since they're not out any money, you still owe them for leasing that shelf. You'll pay more for an eye level shelf, and even more for an end cap. Aldi on the other hand purchases food from the resellers at wholesale, sells the food, and keeps the margin between the two as profit. Cub's incentive is to make their stores as big as possible and thereby lease as much shelf space as they can. That's why there's 20 different brands of toothpaste on the shelves. Aldi's incentive is to keep their overhead small, which is why their stores are much smaller, the food items are left in the shipping containers, and they often only have one size and one type of product (e.g., if you want green olives, you only have one type of jar to select). Aldi also has far more control over the food items, for example, a few years ago they mandated that their food providers be "bee friendly".

I don't think traditional grocers lease out all or most shelf space, thought they do for some areas (chips/soda as you note and some specialty freezers etc.)