ALDI is a "magical" supermarket. As economic uncertainty increases, it is accelerating expansion.

In the 2023 fastest growing supermarket ranking in the United States released by JLL, ALDI remained at the top. [1]

Data shows that ALDI added 109 new stores last year, while Publicx, ranked second, opened 38 stores. Many Chinese readers are familiar with Whole Foods Supermarket, which ranks eighth with 8 new stores. [1]

ALDI US CEO Jason Hart also pointed out that over the past decade, ALDI has added hundreds of stores annually across the United States. [2]

Therefore, the low-key development of ALDI is also referred to by the media as the "hidden supermarket winner in the United States.".

Nowadays, ALDI has accelerated its expansion pace. On March 7, 2024, ALDI announced plans to invest over $9 billion in 800 new stores across the United States by the end of 2028.

Jason Hart stated "Versailles" that ALDI's growth is driven by customers who demand that ALDI open more stores nationwide [2]

ALDI's popularity among customers seems to be traceable. Research shows that ALDI is the most popular supermarket among consumers, with a popularity score of 65%, which is 2% higher than the second ranked Trader Joe's. The top five are Kroger (61%), 7-11 (60%), and Whole Foods Supermarket (57%). [3]

So, why is ALDI so popular among consumers? Perhaps a billboard inside the ALDI store can provide the answer:
They say you can't buy happiness...
Not true.
THESE LOW PRICES MAKE US crazy happy!
They all say, you can't buy happiness with money
Not right. These low prices make us crazy and happy

It is undeniable that "low price" has become an inseparable part of ALDI's image and is recognized by consumers.

ALDI has been ranked first in daily low prices by the Dunnhumby Retail Preferences Index for seven consecutive years. [4] According to research, when discussing the value of the US dollar, ALDI ranks first among a group of supermarkets, with a 96% satisfaction rate for its purchasing power in US dollars. [5]

In this article, we will also discuss how ALDI changes consumers' perception of "low price=cheap without good products" and attracts consumers? What are the operational strategies of this "stingy" supermarket that has become the top tier in the United States?

Breaking stereotypes, low prices ≠ cheap, no good products

There is a saying circulating online: "Expensive things may have no other drawbacks besides being expensive; affordable things may have no other advantages besides being cheap."

This is a stereotype that many people have about low-priced products, and it is also a pain point encountered by companies like ALDI that use No Frills Strategy.

Simply put, minimalist strategy focuses on providing basic products or services at the lowest possible cost, attracting customers through price competitiveness. However, companies adopting a minimalist strategy may face potential issues such as lower profit margins, limited market coverage, and negative customer perceptions.

So how does ALDI effectively execute the No Frills Strategy, change people's perception of "cheap but not good", and strive for sustainable competitive advantages?

It is understood that ALDI continues to convey a message to consumers in its stores: low prices are due to improved efficiency, not decreased quality.

ALDI US President Dave Rinaldo has also stated: It's about simplicity, and it's about efficiency, and it's about a consistent experience all the time. [5]

Meanwhile, ALDI helps people change their stereotypical influence on low-priced products through "know value items (KVI)". KVI usually refers to products that consumers remember the price of, such as milk, eggs, bread, etc. in supermarkets.

The reason why KVIs are important is because they are the way consumers perceive price changes. If the price of KVI sold in supermarkets does not match the price remembered by consumers, they are likely to reassess whether to shop here.

When bread, milk, and other KVI products are priced lower and can meet people's daily needs, consumers are also likely to think that ALDI's other products are relatively cheaper and suitable for purchase. A netizen once said, "Forget your preferred cereal or most trusted peanut butter when entering ALDI - this is ALDI's original beautiful new world."

ALDI has not only subtly changed consumer perception, but also stirred up the competition in supermarkets in the United States. Faced with ALDI's focus on low-priced products, many American supermarkets are feeling pressure to lower prices for products that consumers are familiar with, such as milk and eggs, and increase discounts on other products. [6]

However, it is difficult to ensure profits by simply lowering prices to attract consumers. So, ALDI chose to establish its own brand and even increased the proportion of its own brand to 90%.

The "unscrupulous uncle" Trader Joe's, whom we have analyzed to attract the "refined and stingy" crowd, chose to develop his own brand according to the country where the food flavor belongs, bringing consumers products with exotic flavors. Through these self branded differentiated products sold only by Trader Joe's, the company has attracted many consumers.

However, ALDI chose to directly "tough" and produce similar products to the most famous national brands.

It is undeniable that this is a very direct challenge. Analysts point out that this is because ALDI wants customers to believe they have ultimately purchased a similar product, but there is a significant discount.

Jason Hart stated that ALDI offers a maximum discount of 40% on product prices, which directly attracts new customers to try and also keeps existing customers coming to ALDI for repurchase. Although price is important, ALDI relies on placing the best products on shelves and providing a faster, simpler, and more enjoyable shopping experience to win customer loyalty. [2]

Being stingy has become the top tier supermarket in the United States, everything is for the sake of low prices

Due to the fact that No Frills Strategy typically involves reducing additional features, services, and marketing, as well as adopting a lean operational structure to minimize costs, ALDI has made many adjustments in addition to building a free brand. Even in some ways, it is more stingy than the "unscrupulous uncle" Trader Joe's.

Firstly, ALDI's store specifications are relatively small, which can save operating costs such as water, electricity, and rent, while improving store operational efficiency.

The area of an ALDI store is approximately 12000 square feet (approximately 1114.8 square meters), which is similar to the store area of Trader Joe's. However, the supermarket area can generally reach 48415 square feet (approximately 4497.9 square meters). [5]

Secondly, ALDI has very few SKUs, achieving a selection of products while streamlining.

It is understood that an ordinary supermarket has an average of 30000+SKUs, while Trader Joe's has long controlled SKUs at around 4000, while ALDI only has 1600+SKUs.

What's even more interesting is that ALDI also reduces manual operating costs in various ways that you can or cannot think of.

When it comes to reducing labor costs, the most classic one is a shopping cart that costs 25 cents to rent upon entering. Actually, this is not a paid project. When consumers finish shopping and return their shopping cart to the correct location, they can retrieve their 25 cents.

ALDI stated that the 25 cent shopping cart "rental" system can save customers money because ALDI does not need to hire additional employees to push and organize shopping carts from the parking lot.

Even today, ALDI's shopping cart must be activated through coins and cannot be paid by card swiping. Consumers who come to ALDI also bring their own coins and comply with this regulation. Even some merchants have noticed the pain point of consumers forgetting to bring coins, and have played the joke ALDI, creating a change bag that can hold a 25 cent coin.

It is reported that the sales area of ALDI stores usually only has 3-5 employees, so similar to Costco, ALDI directly displays some products in boxes, thereby saving labor costs. This also makes many consumers feel like ALDI is a busy warehouse. [5]

Even the checkout process of ALDI seems particularly cold and quick.

When you arrive at ALDI's cashier, ALDI employees will simply say "Hi" to you and quickly scan the products you have purchased. You won't go through the leisurely checkout process like Trader Joe's, where the cashier scans and bags products for you while chatting with you from all over the place.

In addition, ALDI does not offer some common supermarket services, such as fresh baking areas, meat shops, and information centers.

However, in order for customers to find their own limited time specialty low-priced products, ALDI has also set up a small specialty area called ALDI Finds. Here, consumers will find food, snacks, and decorations that correspond to recent holidays or seasons.

It is through these "stingy" methods that ALDI has gradually improved operational efficiency, while converting reduced costs into low prices to bring happiness to consumers.

In ALDI's view, money cannot buy happiness, but low prices can. Customers who come to ALDI for shopping feel this joy, which also drives ALDI to continuously open new stores and renovate its storefronts for expansion. In the future, millions of consumers will shop at ALDI stores in the United States every month.

Nowadays, in this era where consumers are more concerned about saving money than ever before, ALDI breaks the stereotype of consumers about low prices through the idea of "good quality, low enough". It gradually selects products, develops its own brand, and operates efficiently, attracting numerous consumers and ushering in its own "shining moment".