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Why is ALDI so much cheaper than other supermarkets? Curious shoppers want to know how they can offer groceries for 20-50% less than their competitors without compromising quality. After visiting the ALDI Test Kitchen and headquarters in Batavia, IL last week I now have a better understanding. Let’s clear one thing up right away: It’s not by offering inferior products. ALDI products undergo considerable testing by their own staff and 3rd party consultants before deemed worthy of offering to the marketplace. The ALDI business model has been so successful because of their staunch attention to streamlining the process from start to finish.
Why is ALDI so much cheaper than other supermarkets?
- ALDI stores offer a narrow selection of 1400 high-volume products as opposed to the typical 40,000 or more by supermarket giants. Because they only offer products with high turnover, their overhead is lower. Perishable products like milk, meats and produce arrive 5-7 times per week, so there’s no need to rotate inventory for freshness.
- No coupons or credit cards are accepted. Debit cards are accepted.
- Customers “rent” a cart by depositing a quarter, and return it at the end of their trip which eliminates the need for ALDI associates to corral them.
- ALDI employees well-trained to multi-task. Only 3-4 employees are required per shift, which helps keep cost down. They are put to use in all areas: stocking, cleaning, and checking out. They work hard, but are compensated well. In the Chicago area, ALDI associates start at $12.65 per hour. Plus, part-time employees with as few as 20 hours per week are eligible for medical and dental coverage.
- Stocking the shelves is also much faster. Products don’t have to be taken out of the box at ALDI. Boxes are designed with colors that blend in with the product packaging – an effort known as the ”invisible case” project. Heavier things like flour and sugar are left on the pallet. Milk arrives on racks so that 80 gallons can be shelved in just five seconds.
- Stores use energy-efficient refrigeration and lighting. New stores use a lot of natural lighting; older stores are being retro-fitted with energy efficient lighting.
- Produce is individually packaged and sold by the unit to avoid weighing at checkout.
- Sale signs are reusable and can be changed manually.
- At ALDI, the checkout process moves at lightning speed. Since ALDI stocks their own private label items, they also design the packaging for optimal efficiency. With 3-6 large UPCs on each package, scanning is much quicker.
- Customers purchase bags (or bring them from home) and bag their own groceries.
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