Aldi News That's Fit to Print

Until I hear from someone who says otherwise, I'm convinced none of the reporters responsible for this Business Week cover-story acutally set foot in one of their subject's U.S. grocery stores. Why?

Because the most striking fact about Aldi, the German mega-discounter, aside from the bewildering array of canned and frozen pork products, is the practice of renting shopping carts. No quarter, no cart.

Besides, does it really make sense to compare Aldi's to Wal-Mart when even Aldi fans say they cannot get everything they need from an Aldi's store that only stocks 700 items? Simply put, it is not that hard to have fat margins on only 700, mostly in-house, items. Do we really want to christen Aldi the next big thing in retailing?

Bet you a quarter Wal-Mart smokes 'em.

Comments

[richard]

I have never paid a quarter for a shopping cart any Aldi's in the midwest, but I have been pissed by Aldi's lack of confidence in personal checks, especially when they have no ATM's at their locales, at least in the midwest.

Great piece, Wal-Mart is going to kick ass if Aldi's ever carries anything that Wal-Mart does, but they don't...same stuff, but as you note, in-house...so not really the same.

[Steven Crane]

See, when you return the cart at Aldi's, you get your quarter back. I think the idea is that Aldi's is a REALLY discount chain, not always in the best parts of town.. and it discourages bums considerably from stealing their carts if the bum has to pay a quarter for it.

[grylliade]

Seems to me it's all part of the whole "choice is bad" meme passing around the media lately.

[Jesse]

In an attempt to further punish its customers, Safeway has engaged in a similar quarter-for-shopping-here practice in San Francisco. Or rather, in my neighborhood Safeway this is the practice. The mgt's reasoning is so facile it's troubling to type:
A)I've never given away my loose change. No one I know has. So, homeless people will never have a quarter!
B)It's better to force customers to buy less while toting a free hand-basket, than to donate to the house the homeless program of San Francisco.

[Patrick]

Jesse, you beat me to pointing out that renting a shopping cart for 25 cents is hardly anything unusual... Was it by any chance the Safeway around Geary and Webster? That's where I saw it... I thought they did it to keep people from stealing carts...?

Anyway, it sounds to me like Aldi is hardly trying to compete with Wal-Mart. That is, they are totally different stores.

[MALAK]

Simple solution is to return the cart and get your quarter back. Either that or you bought a shopping cart for 25 cents. Hmmmm . . . I sense an opportunity here. Quarter a cart, resale value has to be at least $20.00. I smell profits!

[joe]

It sounds more like Cosco than Wal-Mart.

[s.m. koppelman]

As Joe said right up there, on selection Aldi's more analogous to Costco, BJ's and Wal-Mart's own Sam's Club stores, and regional one-offs like Stew Leonard's. There are quite a few players in the grocery and general merch space that sell a smaller selection of products. They're not competing head-on with Wal-Mart any more than they are with Best Buy or your favoirite mega-sized supermarket. They seem to be doing just fine with the concept, too. For Aldi shoppers, sometimes Wal-Mart and warehouse stores are just too damned big. A lot of people don't want to go to Wal-Mart every time they need a half gallon of orange juice or a box of cornflakes.

And Aldi has no problem opening stores in dense urban settings where big-box stores don't fit. Aldis are small. Wal-Mart doesn't have much to worry about, but neither does Aldi. Neither is a straight substitute for the other.

[Amy Alkon]

It's common in Paris, too, at grocery stores. Doesn't seem such a big deal to me. Does a quarter actually buy anything these days?

[gm]

aw snap, take that business week writers! i love it when journalists get all up in each others' grill. so nasty!

[garym]

When I was in Leipzig in 1999, I noticed that shoppers seemed reluctant to use shopping carts. Someone told me that shoppers liked to have everything in their hands -- possibly a carryover from the DDR, when products were less likely to stay on the shelves. I don't know if this explains anything or not.

[Will Spencer]

Aldi's will win because they have perfected this new marketing technique called lightning war which will overtake the Wal-Mart's less mobile marketing strategy codenamed "maginot".

But then the U.S. government will step in and kick their trade-defecit enhancing butts!

[db]

I think the $0.25 cart deposit is intended to discourage people from simply leaving the cart in the parking lot. It costs money to hire an employee to go out and scrounge up all those carts, why not recover that cost directly as opposed to having it inflate your disount pricing, which is the whole selling point of your operation anyway?

[Russ D]

What db said.

A bum could steal a shopping cart or rent one indefinitely for a quarter, no big deal either way.

[Ironchef]

It's Aldi's choice to rent the cart. It's mine to shop there. (I won't)

Why should anyone care if this practice keeps shopping carts out of bums' hands? They can claim "Eventually it's paid for by the shopper".

I'll believe it when I see it. When I can get Nestle cheaper at Aldi than Wal-Mart.

[exoterica]

Do not take these people lightly. I have been inside their management structure, and it's like a cross between a cult, a sweatshop, and a prison movie. These people are very, very FOCUSED.

What's true today might not be true tomorrow.

Remember (only if you're old...) when the only thing Honda imported was 50cc motorcycles? (Only the Beach Boys cared) Then they added that silly little half-liter cvcc car that turned into the Honda Civic? No sweat, the US auto industry was unassailable, right?

We all love a "discount atmosphere", sort of, Wal-Mart has proven that. And we all like working for $9.75 an hour after the middle-class jobs are moved to India and the grunt jobs go to China, right?

Like the past Japan model, I think we're no more than 2 years from the point where China is sufficiently affluent to start re-exporting low-end jobs back to us. And those workers will HAVE to shop at WalMart and Aldi, they won't be able to afford anything else.

Best of luck to us all,
XO

[mm4014]

ALDI is the most intelligent operation around. They do not rent the carts so that bums do not steal them, they rent them to keep parking lots clear (no damaged cars!) and so they do not have to hire anyone to keep it clear (the more employees you have, the higher the prices go...). That is also why you may have to wait in a longer line at ALDI, but guess what...their cashiers are so fast!!! You re-load your groceries, pay and go bag them yourself (see...no baggers...another cost cutter). As far as buying bags, do you really think that other stores give you free bags..NO! The cost of the bags is hidden in the higher price of the product! And you CAN get name brand products at ALDI. It's called "Special Purchase"....they put out a flier every week and it shows all of the new limited quantity items the they will feature. Mostly ALL are name brand for an extremely low price. So to all of you complainers, you are just lazy! I hope that ALDI beats ALL of their competition!

[Geoff]

Yeah, agreed witht he statement above. They dont have to pay a cart pusher if everyone brings their carts back. I work in the grocery industry, and a little known fact is that an average size shopping cart runs around $300. So technically i assure you that their 25 cent mechanism isnt a security device. Did you really think that a bum couldnt come up with a quarter? Anyway...my friends and i have been planning on going to aldis 1 minute before close, with $5 in quarters so we can leave carts all over the place, and make someones life a living hell as they have to go and return all of them (then again would they not be getting a $5 for collecting all of them?)

[Geoff]

Yeah, agreed witht he statement above. They dont have to pay a cart pusher if everyone brings their carts back. I work in the grocery industry, and a little known fact is that an average size shopping cart runs around $300. So technically i assure you that their 25 cent mechanism isnt a security device. Did you really think that a bum couldnt come up with a quarter? Anyway...my friends and i have been planning on going to aldis 1 minute before close, with $5 in quarters so we can leave carts all over the place, and make someones life a living hell as they have to go and return all of them (then again would they not be getting a $5 for collecting all of them?)

[Martha Raines]

I love to shop Aldi's but have one big gripe--they advertise great buys on specialty items such as garden supplies, computers, etc. and you rush to the store the first day after the flier arrives and they don't have any. Wonder if they ever did!!!

[Martha Raines]

I love to shop Aldi's but have one big gripe--they advertise great buys on specialty items such as garden supplies, computers, etc. and you rush to the store the first day after the flier arrives and they don't have any. Wonder if they ever did!!!