Honestly, before reading this case, I never heard of this company before and decided to visit their website (United States). After skimming through and exploring their website, I would definitely want to shop there if there’s a store convenient for me. With estimated sales of $44 billion U.S. dollars in 2005, Aldi is the largest hard discounter worldwide. Aldi operates thousands of stores across 15 countries and sells over thousands of the most frequently purchased grocery and household items at a discounted price. The stores supply various food and general merchandise from fresh meat and produces, to men and women’s essential products; household “must have” products, and beer and wines. The company attracts a lot of bargain shoppers, who is not embarrassed to choose frugality over name brands. Aldi mainly sells its own private-label items at cheap prices and most of its merchandise goods are private label. Aldi stores stock with items that sell fast and gives them the highest margin, and they “achieve their high market shares by pricing their products 20-30 percent below other stores”. (Aldi. Harvard Bus. Case). With the “low price strategy” set by their boards and general managers and promoting their specials in store and on their website, they maintain loyal customers and were able to offer low prices but high quality products. One of their highest priorities is to retain existing loyal customer base and “they rarely advertise externally, except for when they open a new store”, so they encourage customers to use “words of mouth” and spread the words that their store puts customers first.
According to exhibit 4, In-Store Images, the “Right Turning Store” format seems small in the image, and you may think that the check out line would be long, but with their fast process of cashing out and their products having more than one bar code, the cashier doesn’t have to waste time scanning the products and decrease checkout time. Plus, the cashiers used to have to know the price of each item in the store.
Aldi’s philosophy for many years was to “offer a limited assortment of quality daily basic food items at the lowest possible prices and in turn have limited selection for consumers,” which they were trying to keep expenditure at its minimum, yet