Aldi Model

In: Business and Management

Submitted By gongqing6595
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ALDI is a German grocery store that was started over forty years ago. Today it has over five thousand stores in 16 different countries. It is ranked 12 out of the top 30 food retailers in the world, and Germany named it their top brand in 2000. ALDI is able to offer such low prices by having a relatively small selection but buying in large quantities, known as the limited assortment concept. It carries only 700 to 1500 items compared to Wal-mart’s 25,000 items. It focuses on most frequently used products, and spices up its selection with “weekly specials” such as DVD players and house wares.

Their “no frills” strategy is also one of ALDI’s cost saving methods. They eliminate virtually all of the extras. There are no baggers, fancy displays, check cashing or preferred customer savings programs. Customers shop out of open displays, which are easy to replenish and require the least amount of labor. They also use a shopping cart rental system. The customer is required to put a coin in the grocery cart and when the cart is returned the customer gets the coin back. This tactic cuts down on labor costs, since customers must take their cart back to its original location to receive their coin. This eliminates the need to hire employees whose job is to retrieve shopping carts.

ALDI strives to maintain operational efficiency. Its “bare bones” approach to inventory acquisition has made it easier for them to order large quantities far in advance. ALDI has an amazing turnover rate. It can usually turn over its entire store inventory in only two weeks. This helps to ensure the freshness of all their products. Their stores receive new shipments almost daily from decentralized regional logistics centers. These centers are in almost constant contact with their vendors making a very efficient replenishment system. For instance ALDI has been using cross docking for well over…...

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