Anyone who’s ever walked into an Aldi supermarket would notice the difference from your established, big-name chain supermarket. For a start, in your mega-‘market you would expect to see palettes lying out the back in the loading dock, NOT on the aisle floors in the middle of the store. Perched on the Aldi palettes are groceries and other goods in their original cardboard boxes. Aldi has a small shop-fit budget, it doesn’t spend money on installing fancy shelving, it’s stores typify the “no frills store format”, which simply offers, as it’s advertising spiel announces, “Everyday low prices”. Minimalism is one of the standard Aldi store’s by-words. The checkout area tells a similar story. Shoppers line up their purchases on a long counter which gets shunted down to the cashier. The area of the till itself is small, minute even, the whole thing is streamlined for speed and ease of transacting. And you won’t find a cornucopia of either choice or types of products in Aldi’s.
The key to retail success
Sticking to the basis is a large part of the Aldi formula. The supermarket stocks less than 2,000 items…compare this to your average Coles or Woolies supermarket which typically stocks upward of 40,000 items! Looking for some Foie de gras or that special Russian black caviar, no, you won’t find these here. Aldi’s product base resides on what they call Private brand items➀. Smaller concentration of staple products + purchase in high quantities = lower prices for the customers. Although that said, Aldi also offers up to the trolly-pushing punters what it calls “Weekly Special Offers”. Located in the middle aisles—what Aldi cutely calls its “Treasure Aisle” (get it?)—are a diverse range of merchandise, some of which might be in the luxury category, Alpine snow suits and hiking tents, tools for the house handy-person, electronics, European chocolates, right through to the more peculiarly exotic pet pampering products like dog sofas and cat caves➁. All of which are seriously cheap.
🔺 from “The Book of Aldi”
Aldi eschews the “nice shopping experience”, customer service is not great➂. The store’s mission, once the shoppers have made their selections, is to shuffle them through as rapidly as possible, hence the streamlined checkout. Shoppers are ‘encouraged‘ (by the scarcity of space) and the requirement to self-pack to quickly move their goods to the back bench to pack them. Aldi doesn’t have self-serve checkouts or ‘fast’ minimum-item lanes, so inevitably there are queues because of popularity…as a consequence sometimes patience and timing are supreme virtues.
When the last item has been taken from a carton on the palette, a shop assistant will simply replace it with a new carton. This is time-efficient, saving the store staff from having to constantly restock the shelves. And when it comes to personnel on the ground, Aldi certainly have leaner staffing structures than the “Coles-worths” and Tesco’s of this world. This has prompted claims that the German employer puts unrealistic time-pressures on the reduced number of store staff to move the palettes into their point-of-sale position and complete other store-related tasks. When the stores close at 8pm or whatever the local time applicable, the shop attendants and cashiers turn into cleaners and spend the next hour getting the store spotless. There have been allegations (denied by Aldi) that it makes staff in some regions arrive 15 minutes before start-time to check the stock level without being paid. And of course it’s widely known that Aldi have consistently been notoriously anti-union in its staffing management practices➃.
Aldi stores don’t include the extraneous auxiliary facilities regularly found in other larger mainstream supermarkets and hypermarkets—no in-store banking/ATM machines, cafes, photo booths, pharmacies, children’s rides, toilets, etc—Aldi’s view is these add to the store’s end-cost. Instead they concentrate on the singular task of delivering groceries and other household essentials.
Aldi’s control of it’s “own brand”—which makes up a whopping 90 to 95% of what it sells—is interesting. First there’s the design, it deliberately makes the packaging on its food items look much the same as the leading manufacturers’ equivalent brands. Next, it tries to replicate the taste of these popular brands. Then Aldi invents a brand name for the product which often sounds vaguely like the well-known brand. And it apparently works – even on luxury items. To take a UK example: Many British consumers who once shopped at the upmarket Sainsbury’s and Waitrose supermarkets have been enticed by Aldi’s “Specially-Selected” luxury items – and the reason is twofold, obviously price (much cheaper than Sainsbury’s), but also because they now feel they are getting a similar-quality product (retail expert Julie McColl, Glasgow Caledonian University). As well as a recent product expansion to include luxury treats for it’s shoppers, Aldi’s move into ‘fresh’, the fruit and veg lines, has broadened it’s appeal.
Another key to Aldi being so spectacularly successfully in the supermarket game is it’s relationship to suppliers. Because of their runaway retail success they have many primary producers and manufacturers lining up to do business with them, but Aldi is well-known for driving a hard bargain with suppliers (sort of a case of “my way or the highway”). They are also clever at judging what will be efficacious – by sourcing local suppliers and advertising in the UK they have softened the German outsider element and fostered an impression among British shoppers of the big discount ‘invader’ being home-based.
Dr McColl has also drawn attention to Aldi’s recently strategy of positioning some of its new stores in towns next door to the prestigious Marks and Spencer outlets. The appeal of this being that shoppers can easily flit between the two – and avail themselves to the best of both worlds, getting their luxury items at M&S and their basics at Aldi.
The above factors, outlined, are apparently the ‘secrets’ to Aldi’s stellar success and it’s ability to offer and maintain retail prices at rock bottom in markets across the world. In part II I will tell the story of Aldi’s rise from a single grocer’s store in provincial Germany to international retail empire, and of the two publicity-shy and increasingly reclusive brothers who spearheaded the company’s seemingly unstoppable growth and expansion.
✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑✑
➀ called Exclusive brands in US AldiLand
➁ pet furniture seems to be one of Aldi’s specialities
➂ or maybe I mean non-existent – staff are hard to catch, as they are usually flat out haring round the store trying to meet management’s daily schedules
➃ 200 Aldi store managers in the US filed charges against unfair labour practices (University of Huddersfield). Aldi operations in other countries have similarly been criticised for incidences where the store has adopted an authoritarian or heavy-handed line towards it’s staff
☤☤☤ ⌽ ☤☤☤
Articles, papers and sites referred to:
‘Aldi – “The No Frills Retailer”, (Peter Emsell, with contributions by Leigh Morland), Unpublished case study, University of Huddersfield (2011), www.eprints.hud.ac.uk
‘Secrets of store success: Why Aldi is winning the retail battle’, (Alison Kirker), The Sunday Post, 19-Feb-2018, www.sundaypost.com
‘Aldi’s secret for selling cheaper groceries than Wal-Mart or Trader Joe’, Business Insider, (Ashley Lutz), 09-Apr-2015, www.businessinsider.com
‘Aldi rebukes Dispatches Investigation, says it contains “selective information”‘, (Natalie Mortimer), The Drum, 10-Nov-2015, www.thedrum.com
Origin of place name: Birkenhead Point on the southeast corner of Drummoyne (Sydney) derives its name indirectly from a northern English town via the Birkenhead Estate in Drummoyne … Birkenhead is or was a village near Liverpool-on-Mersey in the UK.
Birkenhead Point Factory Outlet Centre (BPFOC), on the western side of Sydney’s Port Jackson, is a bit of a sleeper as far as shopping centres and malls go. Recently, it ‘celebrated’ (sic) it’s forty-year anniversary (opened 26 July 1979), but it was an anniversary bereft of any fanfare whatsoever! The centre has 170 stores or services including two anchor tenants but can’t attract a major department store chain. In recent times it has tried to lure more paying punters by introducing a “shopper hopper” ferry service from Circular Quay or Darling Harbour. Thursday night shopping is virtually a non-event with most of the vendors not bothering to stay open. The only shoppers you are likely to see at night are those grocery shopping at Coles and Aldi✾.
The reasons for BPFOC’s low-key status among the large retail outlets and malls of Sydney are manifold. It’s relatively small size and its distance away from the Sydney rail network are contributing factors. Likewise the proximity of Burwood Westfield (a few kilometres away) and the Broadway Centre to name two, gives these shopping complexes a comparative advantage.
(source: Dictionary of Sydney)
Perdriau‘s rubber hose line
Over the last thirty-plus years the Birkenhead Head complex has undergone several changes of ownership. Most prominently in 2004 it was bought by Singapore tycoon Denis Jen for $111M (later unloaded). Currently, Birkenhead Point Outlet Centre is owned and managed by the Mirvac Group.
(photo courtesy of www.historyworld.co.uk)
(photo courtesy of www.historyworld.co.uk)
