Aldi, the well known German discounter, but how does it keep its prices so cheap and what’s the quality really like?
We offer up 11 reasons as to why it can consistently keep its prices so low compared to the supermarkets.
If you’ve shopped at ALDI you’ve no doubt realised how cheap your shopping is for very similar quality to the main supermarkets.
Have you ever wondered how they manage to keep prices so so seemingly inexpensive?
I once worked in a UK supermarket and the differences between those and the German discounters is stark. At first, their presence was ignored by the big names like Tesco and Sainsburys, but not anymore.
The UK supermarkets have had to awaken. Sainsbury’s even attempts to Price Match 200 ALDI products in some stores, but they have a tough job on their hands as you’ll see below, ALDI is an expert at offering low prices.
11 Reasons ALDI is So Cheap Compared to Other Supermarkets
There are many factors that come together for keeping prices low at ALDI. Here’s our list of factors which when combined provide the answer as how they offer products so cheaply.
Founded as a Discounter
The whole history and culture of the ALDI business we see today is founded on being a discounter. Offering essential food products at the lowest price possible.
ALDI’s history is that of a discounter. This is evident even in the origins of its name, with A and L being the first letters of the founder’s surname Albrecht and DI being short for Discount or “diskount” in German.
Founded after World War 2 when things couldn’t have been any worse for the German people, the first ALDI stores needed to focus on providing the essentials for their customers at the very lowest prices possible. For the simple reason that people didn’t have hardly any money to spend.
Ever since ALDI has simply become a master for providing essential items at discounted prices.
ALDI is privately owned by the founding Albrecht family.
This has many advantages compared to publicly listed and owned companies such as Sainsbury’s, Tesco and Morrisons. These companies have to bear in mind the many shareholders who own the company and expect to receive consistent and growing returns from their investment and a share of the profits in the form of dividends.
A privately-owned company like ALDI is in total control of its business decisions and profits. They can choose to invest in the business how they best see fit and reinvest the hundreds of millions of pounds of profit a year back into the business for more growth and keeping product prices low.
Fewer Product Lines
Aldi sells approximately 10 times fewer lines per store than the likes of Tesco and Sainsburys.
They typically have a range of 1500 to maybe 2000 different product lines, wheres as larger UK supermarkets may have 30,000+
That’s a huge difference and offers many advantages outlined in the other factors below.
The bulk of ALDI’s stock goes straight from the lorry delivery onto the shop floor. They don’t order the stock with the intention of holding some back in the warehouse.
UK supermarkets tend to have larger warehouses. Much needed with 10,000’s of lines to stock.
I remember doing stock checks and you’d have, for example, 12 cases of a product left over after it’s been on offer, that when not on promotion only sold a case a month, so you’d have 12 months worth of stock just this one line.
Imaging that issue occurring over 10,000’s of lines.
Straight to the Shop Floor
In ALDI’s they stack pallets on the shop floor aand don’t take every individual can or carton out of its cardboard outer packaging just saves so much time when it comes to staffing.
Although they have adapted over the years many of the UK supermarkets would individually place items such as cans where they fitted on the shelves, removing each one from its cardboard case packaging.
That pallet is on the shop floor and not taking up space in a warehouse where it might in a UK supermarket because they only put out half at a time rather than the whole thing.
In Adli, they just place the case or pallet on the shelf, job done.
By only stocking, essential items and many fewer product lines in total means ALDI doesn’t require such a big store from which to sell them.
Combine this with smaller warehouses and the aim to get products out on the shop floor as soon as possible as results in needing much smaller stores.
Small stores mean:
- Lower rent
- Lower utility bills
- Fewer maintenance costs
Although Aldi may appear a much smaller business than our most well known UK supermarkets they are actually a huge multinational company in their own right.
Combining this with focusing on fewer product lines means for the products they do purchase they have huge and concentrated buying power.
The bigger orders they can place with suppliers the better prices they can get towards getting them for as cheaply as possible.
This not only helps with the everyday items but also the bargain special buy products in the ever-popular middle aisles of ALDI stores.
Aldi stores are built around efficiency. Every aspect has been considered to keep costs as low as possible while still running the business as well as possible.
They want customers in and out as quickly as possible, so they can serve more customers in total.
Customers are in for the essentials and out. Obviously, there’s always the middle aisles to catch peoples attention, but they are not stores where you can typically find yourself aimlessly wandering around every aisle as you can in some supermarkets.
The shorter checkout aisles. The speed of the checkout assistant that’s faster than you can pack, so you have to pack at the back of the store.
Barcodes are another great example. Have you ever tried scanning your own products in a supermarket and can’t find the bar code, or it’s all squashed up and the scanner can’t read it?
Not a problem in ALDI, on many products they have much large bar codes, some spanning the entire length or circumference of the products. Therefore items can be scanned much quicker.
Quicker customer turnaround at checkouts equals more customers through the tills.
All these factors combined make huge differences when applied across a whole business day in and day out.
Less staff means a lower wage bill.
The staff they do have are generally all-rounders trained to work in many areas of the store when needed. Be that unloading a delivery from a lorry, working on checkout, or clearing spillages on the shop floor.
Compare that to other supermarkets where jobs are a lot more role orientated. There are a lot more workers in ser departments. While they may work hard, they are more focused on the department’s objectives, rather than that of the store as a whole.
Less staff work means lower wager bills which can be passed onto cheaper products.
Look a Like Own Brands
One of the areas ALDI stands out most and is very well known for is its own brand products which look extremely similar to well known big brand name counterparts.
In fact, the biggest difference between the ALDI brands and the big brand name products is the PRICE. They are much, much cheaper.
Mostly because you are not paying for all that brand marketing and profit in the overpriced branded products price in.
Even taste-wise they are mostly on par. Sure there’s the odd item or two most people really can’t do without because they can taste a difference, but for most people, especially if tasting blind you can barely tell any difference and just as often as not you’d prefer the ALDI version anyway.
This is one of the biggest factors an ALDI shopping trip is so cheap. Customers are wasting £10’s in every shop simply by paying brand inflated prices whereas they are essentially buying the same product.
Cheaper own brands have been available for years in UK supermarkets, but often they have tried to influence purchases by making the cheapest level look really cheap e.g Tesco value range. Anything you’d buy in those white tins stood out a mile in your shopping as value.
Just Low Prices – Not Offers
AIDL focus on low consistently low prices. They don’t constantly have money offers or buy one get ones free.
This means they have constant data about how good sell at a set price throughout the year.
Compare that to the supermarkets who have all kinds of on and off offer strategies to try and sell their products.
No Loyalty Scheme
ALDI doesn’t have a loyalty points scheme. They keep things nice a simple and focus on just selling items at the lowest price.
Compare this to the main UK supermarket loyalty schemes, including Sainsbury’s Nectar and Tesco Clubcard schemes.
In comparison to the simplicity of buying at a low price, point collecting customers are made to jump through hoops to keep up with every changing loyalty card scheme changes and points values.
This is something the discounters, particularly Lidl have directly poked fun at over the years, particularly in the case on Morrisons More points.
Frequently Asked Questions
Is ALDI Food Lower Quality?
The quality of ALDI own brand foods is on par with the big brand names they mimick and other supermarkets. It’s one of the reasons for their great success, not only do they imitate the packaging designs as closely as possible they also match the flavours.
Fresh produce on the other hand is generally not as good as the other big four supermarkets. It often looks okay quality at the time of purchase but just doesn’t last as long.
Is ALDI Good Quality?
Overall ALDI offers very good quality food. Sometimes you’ll even find quite luxurious quality food like Lobster or caviar and best of all at very good prices.
- How is Lidl so Cheap? Including extra ways to save.