Why is Aldi Cheaper Than Other Big Name Grocery Stores?

Aldi is a discount grocery chain that was founded in Germany in 1946. There are now more than 10,000 stores in 20 different countries. 

These stores are a lot smaller and offer fewer items than big-name grocery stores. But, although the company earns billions of dollars annually, it still can provide consumers with products that are very reasonably priced.

Who Owns Aldi

Brothers Kar and Theo Albrecht founded Aldi, who wanted to open a grocery store that didn’t have a lot of overhead costs. Because their stores were so different from other ones in the area, their customer base quickly grew thanks to word of mouth. 

In 1960, the brothers disagreed about whether or not their stores should start selling any tobacco products. This disagreement caused them to split the Aldi chain into Aldi Nord and Aldi Sud.

How is Aldi Associated With Trader Joe’s?

Many people believe that the same parent company owns Aldi and Trader Joe’s. However, they are each independently operated. 

Trader Joe’s first opened in 1958 in California as just a convenience store. Aldi Nord ended up acquiring them in 1979. So the only association Trader Joe’s and Aldi have with one another is through their owner’s family heritage.

Does Aldi Have a Franchise Model

The franchise model of Aldi tends to be a lot simpler than big chain grocery stores. Their goal is to give customers a value-based shopping experience. 

They don’t do a lot of advertising or spend money on in-store decorations or fancy packaging to save money and pass some of these savings onto their customers. 

Can Anyone Own Aldi

Because Aldi is a privately owned company, private individuals can’t own an Aldi store. Therefore, there aren’t any franchise opportunities available, and there are no stocks available to purchase either.

Reasons Why Aldi is Cheaper

Many consumers claim that they can save hundreds of dollars a month on their grocery bills by shopping at Aldi rather than a big-name grocery store. Aldi tends to be cheaper for the following reasons:

Few Workers

Unlike larger grocery stores, Aldi only has a few workers working at one time. Because of this, they can save money on labor and offer lower prices. 

Fewer workers may mean that only one or two cashiers work during a shift, and the checkout lines may be slightly longer. However, the cashiers can get their customers checked out as quickly as possible since they don’t have to bag items after scanning them. 

In addition, workers can stock shelves reasonably quickly even though they may be doing the stocking by themselves. This efficiency is because there are fewer items than at larger grocery stores, and in many instances, they don’t have to line up each item on the store shelves carefully. 

Higher Pay

Many people are surprised to find that Aldi can offer lower prices because they pay their employees well. Because they pay them a decent wage, Aldi doesn’t often face high employee turnover that can cost companies a lot of money each year.

No Grocery Bags

Aldi doesn’t provide their customers with free grocery bags. Customers can purchase plastic or paper grocery bags or bring their own. After the customer has checked out, there is an area where they can sort and place their items in the bags they brought with them or purchased at the store. By not providing their customers with free bags, Aldi can price their items lower than big-name grocery stores. 

Private Label Items

 You won’t find a lot of name-brand items at Aldi. Instead, most of the items they sell are private label brands that cost less than more well-known brands. Many customers find that they don’t notice any big taste or quality differences with these types of items. 

Most of Aldi’s name-brand products are sold at a deep discount. This discount is because these items tend to be ones that the manufacturer produced too much of. Because of this reason, these items are priced cheaper than they would be at other retailers.

Efficiency

One thing that allows Aldi to have lower prices is that they are very efficient, and it costs less for them to operate their stores than it does for larger grocery stores. These are some of the ways that Aldi is efficient:

Staffing Model

Instead of hiring many different people and offering them a minimal amount of training, Aldi employs just a few employees and ensures to train them adequately. As a result, they learn how to be efficient at doing things like scanning items and placing them in the shopping cart quickly. 

Electricity

Because of the small size of Aldi stores, they can save on electricity. In addition, many Aldi stores tend to have a lot of windows so that natural light can come in. Aldi stores also use LED lighting. This type of lighting is energy efficient and typically lasts longer than traditional light bulbs.

Stocking Shelves

The shelves in Aldi look a lot different from those in most grocery stores. Employees open up boxes of items and place them on the shelves. 

Employees don’t have to spend time removing items from their packaging and perfectly lining them up, which allows them to restock the shelves in a minimal amount of time. 

More oversized items, like milk and water, are left on palates. When these items are running low, staff will replace the palate with a new one instead of spending their time restocking each item.

Cart Rentals

Big-name grocery stores often find that they have to spend a lot of money annually replacing shopping carts that are lost or stolen. Aldi can prevent this by having customers rent their shopping carts. 

To use one, each customer must place a coin inside the locking mechanism to unlock it. They can only get their coin back by returning the cart. This strategy gives them an incentive to bring their shopping cart back.

Limited Store Hours

Aldi isn’t open for as many hours as big chain grocery stores. As a result, they often open later and close earlier. This limited-time allows them to have lower operating costs than larger stores open for longer hours.