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11/01/2014

Value + Quality = ALDI

Aldi appears on our Leading Retailers list again this year, and for good reason. The German-based retailer has positioned itself as a discount grocer where quality is still top of mind. Given the current trend of market bifurcation, whereby shoppers migrate to the high and low ends of the market, Aldi's nearly 100-year-old strategy couldn't be timed more perfectly.

Aldi is notorious for its strict emphasis on efficiency, and its core purpose to "provide price and value to our customers by being fair and efficient in all we do." Doing away with extensive promotions and labor-intensive services has allowed the retailer to pass the savings along to its shoppers.

At traditional retailers, shoppers have come to expect all of the bells and whistles that enhance the "shopper experience." Aldi customers have willingly dropped a quarter into the corral out front to "rent" a cart and have embraced Aldi's product mix that relies heavily on own brand products.

As a result, Aldi has enamored U.S. consumers to the point that the grocer announced an aggressive (read: $3 billion) expansion plan at the end of 2013. The plan calls for 650 new stores over the next five years, which would reportedly create 10,000 new jobs.

THINKING LEAN

Aldi has applied its commitment to efficiency to virtually every part of its business. Its stores are simple in design and easy to navigate, making the most of shoppers' valuable time. Products are often merchandised in bulk quantities in their shipping containers, saving employees time stocking and re-facing shelves and simplifying the concept of merchandising.

Energy is one of the most expensive overhead costs for a grocer, so Aldi keeps its stores small at about 16,000 square feet. It also invests in leading-edge energy-efficient lighting and equipment for all of its stores, passing the resultant savings onto the consumer.

"Aldi aims to achieve life-of-equipment savings over first-cost capital savings," says Todd Bonnett, Director of Real Estate of Aldi's Salisbury Division. "While some of the energy-efficient equipment we invest in is not required by energy codes, it does lower our operating expenses."

Even Aldi's hours of operation follow the efficiency mantra–stores are open during popular shopping hours only. Extended hours equal additional labor and operating costs that the retailer isn't willing to pass on to shoppers.

At checkout, shoppers load their groceries into their own reusable bags. No plastic or paper bags are available. And in yet another cost-saving move, Aldi accepts debit or EBT cards or cash. No credit cards are accepted, eliminating additional fees for the retailer.

Through word and deed, Aldi promises its shoppers that eating well does not mean sacrificing quality. By applying the concept of lean thinking to everything from its operations to its product offerings, the retailer has made good on that promise.