If you’ve ever shopped at Aldi, you know they save you money. Lots of money. Their legions of fans will attest to the fact that they’re not selling cheap, inferior products — so how do they get those prices so low? It turns out there are a ton of ways Aldi got creative with cutting costs so they can pass those savings on to you. Let’s break down how they really do it.
Staying open late might be convenient for the customer, and some of us even prefer going grocery shopping in the middle of the night. Those that do, do it to avoid the crowds, and since there’s not too many people shopping at midnight, that means grocery stores are spending more than they’re making. Aldi eliminates the problem by only opening during peak shopping hours, and that means they usually close at 7, 8, or 9 p.m. It cuts down on everything from staffing costs to utilities, and according to Aldi corporate, a lack of late-night noise makes them a great neighbor, too. Added benefit? Daytime hours means no werewolves. Everybody wins.
Taking the air out
Ever ripped open a bag of chips or cereal to find half of it’s filled with air? That’s actually called ullage, and minimizing the ullage in their packaging is one way Aldi’s saves money. Less air means smaller boxes and bags for the same amount of product. The smaller packages create some serious savings from start to finish: items cost less to package, more fit on a single pallet, more fit on a truck, stocking the store can be done with lower fuel costs, and once the products are there, they take up less room, making stocking way more efficient. The effect is so substantial, it’s hard to believe more places don’t do it.
Help us out
There’s nothing more annoying than going to Aldi and realizing you’ve forgotten your shopping cart quarter, but that little inconvenience keeping you from accessing the carts for free saves you a ton of money in the long run. Plus, too many rogue shopping carts is totally dangerous. Since customers are doing the legwork and returning carts to the trolley at the front of the store, Aldi doesn’t need employees to do it. Labor costs are one of any business’s biggest expenses, and every little bit helps — especially when it adds up to hours and hours of time saved every week.
They spend extra upfront
According to documents released by Aldi that detail their requirements for a location, they’re incredibly specific in what they look for. Not only is the perfect Aldi’s location on a street corner and near other stores, but the cost-saving measures start at this stage of the game, too. Aldi says their carefully-placed stores are built with only the best, most durable, and long-lasting building materials. It’ll cost more upfront, but they’re thinking long-term. Aldi properties tend to cost the company less over time, because of low maintenance costs, few things that need replacing, and they sustain little to no wear and tear. The benefits are twofold — it saves them money, and it makes them a good neighbor.
Just the essentials
You won’t need to choose from 20 different types of brown rice when you go to Aldi, and that’s because they limit their stock. You might have noticed this, but you might not realize just how limited your choices are. Aldi keeps around 1,400 core items in stock all the time. That sounds like a lot, but not when you compare them to competitors like Kroger and Wegman’s. On average, these Aldi competitors keep around 30,000 core items — that’s a big difference! “They probably have 40 different kinds of tea, a rational thoughtful shopping trip you’d be dead of starvation before you finish shopping.” Limited stock allows Aldi to save money by buying in bulk. Instead 20 different types of ketchup, Aldi buys a huge quantity of one or two kinds. After that, all those bulk discounts make their way to you. And let’s face it, you need a lot of ketchup. “That’s enough ketchup, come on…” “I like it.”
Aldi corporate says more than 90 percent of the items on their shelves are a part of their own private label, and there are many reasons they do this. Not only does it allow them to keep strict quality control measures in place, but it also allows them complete control over everything that happens along the supply chain. This eliminates a part of the process that increases prices at other stores: the middleman. There are no extra markups, and since Aldi is doing so much in-house, they’re able to pass along some serious savings.
Produce and perishables
“What’s this place called?” “This place, I believe is called food library.” As much as some people like the store, Aldi isn’t for everyone. The store has limited selection when it comes to things like produce and perishable items, and actually, that’s on purpose, and built into their business plan. Since there’s no guarantee something super-perishable like fruit or vegetables will sell before it goes bad, they minimize their risk by stocking less of it. The company has said that its goal when it comes to ordering, stocking, and selling perishable items is simple: minimize waste. It saves them money, it saves you money, and the food that doesn’t sell often goes to charitable organizations, to make sure it goes to good use.
Just in time, just enough
Take a glance around an Aldi store, and check out the footprint. There’s not a whole lot of space for storage, and that’s by design, too. Unlike a lot of stores, Aldi doesn’t have a majority of their cash tied up in merchandise, and that’s because, they use an inventory system called the just-in-time model. So, how does that help? It means they’re able to lower their operating costs by not keeping a supply of stock in warehouses and storerooms, that new stock is ordered only when it’s absolutely needed, and it relies on the ability to keep ridiculously good tabs on demand and product movement. It’s risky — if there’s a breakdown in the supply chain, it could be disastrous — but Aldi’s reliance on their own private label brands gives them an advantage here, too.
Stocking shelves the easy way
When it comes to getting product off the truck, into the store, and on the shelves, Aldi has it down to a science. Product is typically shipped in the same boxes it’s going to be put on the shelves in. Their boxes aren’t just boring old cardboard, but specially designed to look like they’re a part of the display. Milk is shipped pre-loaded onto racks, so it just needs to be wheeled into place with no need to shuffle around new and old product. Some things — like basic baking supplies — will always be found on the lowest levels of Aldi’s shelves, and that’s because they’re put into place still on the pallet. Since stocking takes Aldi’s employees a fraction of the time it takes other stores’ employees, that frees them up to do other tasks and cuts back on labor costs.
Do you work here?
While a traditional grocery store might have dedicated roles for everything from stocking shelves and running the cash registers to manning the deli counter, Aldi keeps staffing to a minimum by expecting employees to be versatile enough to fill a variety of roles. If you’re looking at career opportunities available in the US, you’ll find Aldi stores hire a store manager, manager trainee, shift manager, and store associate. What you won’t find are job descriptions, and that’s because there are a huge variety of tasks each employee is expected to handle. Aldi’s pretty mum on how many employees they officially have, but according to an Indeed Q&A, there are between eight and ten people employed at every store, and there are never more than four on shift at any given time. Everyone’s expected to do a little bit of everything, and that means there’s little down time for employees. They’re compensated well, but Aldi says right upfront the job isn’t for everyone.
The smaller footprint of Aldi stores is just one way they minimize their operating costs. All Aldi stores are designed and outfitted to be as environmentally friendly as possible. Many Aldi stores are running on a complete energy management system that monitors the energy impact of everything from lighting to cold storage. New stores are outfitted with the most efficient technology, and older stores are routinely upgraded to make sure they’re running at peak efficiency. That includes being equipped with things like LED lighting, natural lighting, energy-saving coolers and freezers, and they also use heat recovery technology that lowers their heating costs by as much as 30 percent.
“Do you have your reusable bag?” “ …. uh….” On the surface, it seems like another inconvenience. When you go to Aldi, you’d better remember your reusable shopping bags, or you’re going to be buying some more bags. They don’t just do it to be environmentally friendly. Handing out shopping bags adds up when you take into account all of Aldi’s customers worldwide, and if they’re not buying bags for every one of those customers just to throw away, that’s a huge savings they’re passing on to you — and the planet.