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how a cheap, brutally efficient grocery chain is upending america\'s supermarkets

by:Xilong      2019-08-26
The story of nazinier mayyethorn, Bronte Lord\'s CNN business video, the CNN business Photo of Dina Litowski, published in May 17, 2019, runs a supermarket in the United States
Small profits.
Online shopping and home delivery are changing the way people buy food.
Dollar stores and pharmacies sell more groceries.
The pressure is so great that regional chains like Winn\'s owner Southeast grocery storeDixie and Bi-
Lo filed for bankruptcy.
Big companies are increasingly controlling the industry, which has long been a decentralized network of smaller local grocers.
Even Wal-Mart faces new competition from Amazon, which bought Whole Foods in 2017 for nearly $14 billion.
But when Wal-Mart\'s us ceo Greg Forland talks about one of his competitors with words like \"intense\", \"good\" and \"smart\", he doesn\'t mean Amazon
He refers to large chains like Kroger or Albertson, dollar stores like dollar General, or online entrants like FreshDirect and Instacart.
Fulan is describing Aldi, no-
The decoration of the German discount grocery chain is booming in the United States and has reshaped the industry in the process.
New customers may initially be shaken by their experience of shopping in Aldi, who wants customers to endure minor inconveniences that are not common at other grocery stores in the United States.
Shoppers need a quarter to rent a shopping cart.
Plastic bags and paper bags can be used at a fee only.
At checkout, the cashier will let the shoppers leave in a hurry, hoping that they will put their groceries somewhere separate from the cash register.
But Aldi built a cult. like following.
It is not uncommon for hundreds of people to attend the grand opening ceremony when it enters a new town.
All the temptations are in the rocks
The reserve price is so cheap that Aldi often beats Wal-Mart at his own low priceprice game.
Diane Youngpeter said: \"I am willing to do extra work because the price is too expensive and he runs a fan blog of the owner of the grocery store called Aldi Nerd, there is also an Aldi Facebook group with 50,000 members.
There are a lot of Aldi nerds outside, she said.
I don\'t realize that we have so many people.
Aldi has more than 1,800 stores in 35 states, focusing on the growth of the Midwest
Atlantic, Florida and California.
It is expected to become the third Dalian lock supermarket in the United States after Wal-Mart and Kroger, with 2,500 stores by the end of 2022.
Its rival Lidl, another German grocer with the same low
In the United States, the cost business model is also developing rapidly.
In the course of their aggressive growth, the two discount chains forced others in the grocery industry to make major changes to retain their customers.
Aldi even literally encroached on Wal-Mart\'s lawn.
In October, Aldi opened a store in Bentonville, Arkansas, just a mile from Wal-Mart\'s corporate headquarters.
\"I have never underestimated them,\" Forland said at an industry conference.
I \'ve been competing with Aldi for 20 years. plus years.
They are very fierce. they are very good.
But as competitors fight back, can the company keep a low profilecost advantage?
Can it stick to what it calls the \"aldi way?
How Aldi keeps such a low price is no longer a secret: the company takes away the shopping experience in a way that is unapologetic and cruel and efficient.
\"They were able to squeeze out every penny of the cost without affecting the quality,\" Kenan-, University of North Carolina-
Flagler Business School
Aldi is a private holding company that, through a spokesman, declined to have executives interviewed.
But Gielens estimates its operating costs are about half that of mainstream retailers.
The company\'s profit margin is also lower than that of its competitors, she said.
From the customer\'s point of view, the unique experience begins with the shopping cart Aldi has been locked in the shopping cart.
To save labor costs, Aldi locks up the shopping cart.
Customers deposit in a quarter and they get it back when they return the car.
Aldi wants customers to return the carts to the store after each purchase, rather than hiring a team of runners to retrieve the carts from the parking lot all day long.
This forces this behavior to charge customers a quarterly deposit, which they will take back when they return the car.
This is not a novel idea.
Several American grocery stores have tried this in the 1980 s and 1990 s, but have given up after it annoys customers who expect the grocery store to provide more services.
Aldi, who opened the first US store in Iowa in 1976, insisted on this model and insisted on the deposit system as the key to its low priceprice strategy.
The dead in the store-
Hardcore fans even celebrate it, which heralds the fact that Aldi offers \"quarterly keeper\" key chains from time to time.
Some fans even woven their own versions.
You to check of Etsy of â x80 x9c Aldi quarter keeper â x80 waste in more than 500 of results.
Don\'t stop there.
When customers enter the store, they notice that they look almost like a traditional supermarket in the US.
Five or six super.
On the wide aisle, Aldi only stored about 1,400 items, compared with about 40,000 items in traditional supermarkets and more than 100,000 items in Wal-Mart. For time-
A budget shopper like Youngpeter, aldi Kumar saves her time with simple layout and limited options.
I am a busy mother.
I don\'t have time to go to a large grocery store where the kids beg to go out and go home, she said.
I can get in and out of Aldi at any time.
I\'m not going to screen 50 different salsa.
Try to find the main brand and good luck to you.
More than 90% brands sold by Aldi are their own private labels, such as simple natural organic products, Milville cereals, hamburger ketchup and selected bread. (
It\'s no coincidence if it sounds like Trader joe jos.
The two companies share a common history. )
The packaging on these items sometimes looks very similar
Say the alternative that the customer finds himself making a double choice. take.
Aldi\'s honey nut crispy oats, for example, are packed in a box, and the shades of orange, yellow and brown are almost the same as the universal Mills Honey Nut cereal, and the font is similar.
Aldi sells Tandil laundry detergent in an orange plastic tank, with blue and yellow graphics reminiscent of tides.
The Millville toaster tart of the Aldi house brand looks very similar to Pop-
But a 12-serving pie.
The Millville version is packed for $1. 85 while a 12-pack of Pop-Tarts costs $2. 75.
These cornflakes are as good as the ones with chicken on the box, if not better!
Allison Robicelli, a food writer in Baltimore, says they are exactly the same and she claims to be a loyal follower of Aldi.
Although it may not be obvious at first glance, Aldi has also adopted several key design details to maximize efficiency at checkout.
On many of its products, the barcode is either oversized or printed on multiple sides to speed up the scanning process.
They had nowhere to go after the groceries called.
The cashier puts them directly into the shopping cart below.
Aldi does not waste time bagging groceries.
The customer must drive away the shopping cart and pack their own groceries in a separate part of the front.
Since free bags are not provided in the store, customers often look for empty cartons in the store to replace them.
Those lines flew.
You\'re not waiting for people to pack their bags.
Robicelli said they wouldn\'t be messing around there.
Once you see this efficiency, it\'s really annoying and tedious to go to other supermarkets.
Another Labor-
Money saving tips: Cashiers don\'t have to pack groceries.
Instead, they put items directly into the customer cart.
Aldi has other ways to reduce real estate and labor costs.
Size is a factor.
The average size of Wal-Mart is about 178,000 square feet.
The average Costco warehouse is about 145,000 square feet.
Small Box shops, however, account for only a fraction of the space, averaging 12,000 square feet.
1,400 to 40,000 Aldi only had about 1,400 items in stock, compared to 40,000 items in traditional supermarkets.
Unlike other stores, the cashier calls the customer and the clerk has a clear division of labor on the shelf
Trained to perform each function.
Their duties have also been simplified.
To save staff time on stocking shelves, Aldi displays the products in their original cardboard shipping boxes instead of stacking them separately.
Most stores do not publicly list their phone numbers because Aldi does not want the staff to take the time to answer the phone.
Results: at any given time, an Aldi may have only three to five employees and only 15 to 20 employees on the entire payroll.
The company claims to pay workers higher than the industry average, but it can still save overall labor costs by reducing manpower alone.
All these cost savings are added together and passed on to the customer.
Aldi claims its price is 50% cheaper than traditional supermarkets, and Wolf Research\'s independent analysis shows that in markets such as Houston and Chicago, its price is about 15% cheaper than Wal-Mart.
\"They cleverly lowered prices,\" said Foran of Wal-Mart . \".
When he visited Aldi last year, he noticed that the price of a gallon of milk and a dozen eggs was 99 cents.
Forang said he and his team could not risk losing on those popular items.
Despite being deprived.
In terms of the store experience, Aldi scored higher in the customer satisfaction survey and benefited more from wordof-
Than the word-of-mouth marketing of Wal-Mart and other supermarkets.
According to Bain, it has the highest net promotion score, a key measure of the likelihood of customers recommending the brand to friends and family in the grocery industry.
After Aldi first entered the US, it took the company 20 years to expand to 500 stores.
Now, in the rapid growth phase, Aldi is expected to open more than 130 new stores in just one year this year.
The Great Recession and the slow recovery helped discount grocers gain popularity in their budgets --
Conscious shoppers in the United States.
The latest expansion of Aldi is based on this momentum.
\"In the past 10 years, they have been very prosperous in the United States,\" said Bain\'s partner Mikey Vu . \".
There are unstable factors in the economy.
People are worried.
They pay more attention than ever to the penny of grocery shopping.
85% of American shoppers say they are open to trying store brands.
Source: Bain, of course, is not the only discount store to grow in retail.
TJMaxx, Ross and Burlington are all opening new doors and their low prices are putting pressure on department stores.
Ollie\'s cheap products and the following five are growing rapidly.
Dollar General has opened thousands of stores in recent years.
Part of its success for Aldi is that it not only attracts people in the middle and lower levels
Income shoppers, but also more affluent people.
Bain says aldi Foods\'s core shoppers tend to make more money than overall grocery shoppers, with a slightly higher level of education.
Recently on an Aldi in Hackensack, New Jersey, luxury cars including a $50,000 Jaguar and a $80,000 Tesla Model X are next to Toyota\'s Ford and Honda.
When he visited Aldi in Australia, BMW and Mercedes were also in the parking lot there, which surprised him.
People like to save money on staple food.
He told investors and retail executives at Four Seasons Hotel in Boston that it would apply to everyone in the room.
If you can save $10 on your grocery bill, you will feel good because you will feel better when you go out for dinner on Saturday night and spend $200 at the restaurant.
In recent years, Aldi has stepped up efforts to attract high-tech
Income shoppers by offering more fresh organic produce and imported goods such as Irish cheese, brioche from France and pasta from Italy.
The store now offers private services
Label version of cold kom tea
Squeeze juice, a range of gluten
Free products and peanut butter powder.
Aldi invested $1.
9 billion renovate 1,300 stores with natural lighting to update the agricultural products, dairy products and meat parts.
Since 2017, its new stores have been concentrated in the middle and upper floors with a larger population.
According to Bain, the suburbs.
Aldi\'s new store is zip code with an average household income of $65,822, about $4,500 higher than the national average.
Vu says they are clearly trying to pursue more upscale customers.
Part of Aldi\'s appeal is not just on lower grocery bills, but on Aldi\'s clever way of selling discounts, said Gillens of the National Bureau of Statistics.
The bargainer on the income ladder finally feels smarter than the others higher
When supermarkets and big brands see their grocery receipts, they price them.
Aldi wants to be a \"smart shopping option\" to spread the message that traditional grocery stores and brands are just cheating consumers, she said.
Aldi highlighted this message on the store\'s signboard.
The same is always better when the cost is lower.
There are new deals every week. Find them here.
Bragging like crazy
Aldi encourages customers to give up their grocery store: switch and save.
Americans are listening.
According to a survey by Morgan Stanley, 19% of retail-change shoppers started shopping in Aldi last year.
This is second only to Wal-Mart.
On many products, the bar code is either oversized or printed on multiple sides to speed up the scanning of the cash register.
Aldi\'s dependence on private
Label brands have also helped it win the millennial generation of more and more brands
Bain\'s data show that they are agnostic, but attracted by lower prices and convenience. Private-
According to Nielsen data, label products have experienced a revival in recent years, and now supermarkets are growing faster than the top 20 national brands.
Stores like Trader joe and Costco have built an empire to sell their own brands.
For example, Costco Kirkland\'s signature received nearly $40 billion last year, an increase of 11% over 2017.
Last year, Kirkland sold more than Campbell Soup, Kellogg and Hershey combined.
Retail brands challenge these consumer goods giants that spend billions of dollars marketing their products.
It used to be a white label-
About the store brand, Vu says you\'re a little embarrassed to buy but it\'s cheap.
According to Bain\'s customer survey, 85% of American consumers said they were willing to try their own-brand products.
\"People no longer care about big brands as they used to,\" he said . \".
\"This is exactly the script for Aldi.
Aldi\'s obsession with thrift came from the early masters: the Theo brothers and the Carl Albrecht brothers, who took over the family grocery business in Essen, Germany, after World War II.
Early stores initially store only a small amount of items as necessary, but as the business grows, the brothers plan to expand the range of options.
Over time, however, they recognize that they can successfully sell a range of base products.
If we don\'t want to offer a wide range of products to our customers, then we should at least provide them with some other advantages.
According to a book by former Aldi manager Dieter blenders, Carl said in 1953 that since then we have sold our products at an absolutely low price.
Theo so insists on keeping the cost low that it is known that he will take notes on both sides of a piece of paper and turn off the store lights during the day.
The brothers purposefully kept the store aesthetic at its lowest level in Sparta.
Carl said in 1953 that there were no decorations in the store.
All of our promotions are at a discounted price.
It is reported that in 1961, the brothers divided the business into two parts, and the two sides disputed whether to sell cigarettes in the store.
Carl took southern Germany and Theo took control of the North.
Until today, Aldi Sood and Aldi Nordisk are still independent companies, and in Germany the dividing line between the two is called \"Aldi equator \".
Aldi s Zaid is a rapidly expanding company in the United States and Europe.
Aldi Nordisk also has operations in the United States through Trader joe Nord s, which acquired the company in 1979, but its growth is not as ambitious as its cousin.
At the end of 2018, Trader joe Tuss had 484 stores in the United States.
The Albrecht brothers have died in the past decade.
According to Deloitte, the two chains are currently operating in 18 countries, with total sales estimated at $98 billion last year.
Aldi is not only one of the largest grocery stores, but also the eighth largest retailer in the world.
The two Aldis combinations are now larger than CVS or Tesco and are only a few steps away from the Amazon, Home Depot and Walgreens Boot Alliance.
Aldi\'s rapid growth in the United States imitates its broader international expansion in Ireland, Hungary, Switzerland, Australia and even China.
The company has also grown rapidly in the UK, with many local grocery stores ignoring Aldi before it\'s too late.
But with Aldi\'s expansion in the US, the real concern is whether it will remain low. cost advantage.
S. competitors have learned to respond more quickly when Aldi lowers prices, which may weaken its impact.
\"They have taken Aldi as a more credible threat,\" Vu said.
According to a study by Wolf research analyst Scott Mushkin, Wal-Mart has narrowed the price gap with Aldi since July 2017, and he recorded 40 previous
It sells at Walmart in Houston and Aldi across the street.
Wal-Mart also narrowed the gap with Aldi, Chicago.
He found it to be a regional store.
In an effort to counter Wal-Mart and other Wal-Mart moves, Aldi has begun to compromisebones approach.
In September, it launched a national advertising campaign, including television ads, to boost its sales
High quality products.
Aldi has also recently promised to cut plastic and transition to 100% sustainable packaging by 2025, which is not a cheap effort.
In 2018, Aldi added 40% of fresh food by expanding product selection and adding new vegetarian and vegetarian options.
It began to offer more alternative milk, including soy and almonds.
These changes are expensive and can disappear in aldi\'s profits.
Simon Johnston, an analyst at Kantar, said the model worked only if it was actually the cheapest.
Customers also say they are starting to notice more brands --
The name of the goods on the shelf, such as coca
Coke, moisture and Old Spice deodorant.
To be honest, I don\'t like it when they bring in a national brand.
I like the holiness of Aldi, adding that she is worried that the price may rise.
Meanwhile, Aldi faces fierce competition from its closest competitor, Lidl.
In 2017, Lidl cut ribbon at the first US store in Virginia, North Carolina and South Carolina, and recently opened three stores outside Atlanta.
It is also expanding in high-income communities.
Lidl now operates more than 60 stores in China.
Aldi is closely following the growth of lidl.
In a federal lawsuit filed, Aldi accused two of illegally sharing confidential information with Lidl about its sales, future store location and real estate strategy.
A Lidl spokesperson said the company \"believes in fair play and the allegations in the lawsuit are inconsistent with our business practices and values.
We are investigating claims that we take seriously.
\"Although large competitors can lower prices to compete with Aldi, regional supermarkets are squeezed due to the grocery price war.
Top market and southeast grocery store, owner of WinnDixie and Bi-
Lo filed for bankruptcy recently. Save-A-The second-
Following Aldi, the largest discount grocery chain in the United States is in debt and cannot continue to cut prices without sacrificing profits.
Fitch Solutions said in a research report, \"aldi and Lidl will be an important interference force in the United States, threatening smaller regional supermarket chains and forcing
Analysts predict that grocery stores in the United States will face more bankruptcy.
\"There is a larger portion of secondary and tertiary grocery retailers in the US,\" Bain\'s Vu said . \".
Those are the people who are dying.
Vu added that as smaller grocery stores disappear, Wal-Mart and Aldi may both have room to clean up the mess.
At the same time, Aldi will continue to lead the price war, but also put pressure on more players.
\"They were very successful,\" he said . \"
\"We haven\'t seen such spoilers in the grocery store for a long time.
\"The Internet has not shrunk its real estate commission by 6%.
But the lawsuit could happen at idles, GM\'s Lordstown plant, a landmark job in the United States that is about to go extinct.
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