Quote from makloda:
Aldi is run by two brothers from Germany -- now in their 90s. They are in the Forbes top 10 list, they go by the names of Karl and Theo Albrecht.
Their concept is simple but cutthroat: offering no-brandname fast rotating goods only. They're notorious for "convincing" suppliers to cut costs and prices again and again as Aldi is purchasing humongous volumes. They offer around only 350-400 products that cover 75-80% of the daily staples usage in a working class household. They go through an entire store's worth of inventory every 24-48 hours.
Wall-Mart entered the German market I believe in 1997/98. They closed up shop, frustrated, just 2-3 years later. Not a chance.
A typical Aldi store would have 1 manager and 4-5 checkout employees. There's usually nobody to give you any in-depth service. Customers know that. Back in the day (this might have changed) the sales ladies at the checkout didn't even have barcode scanners. After years of training and given the limited amount of products sold, they were much faster just typing in product IDs. Aldi pays the sales ladies based on the amount of products sold, it's some form of incentive based system.
During University in the 90s I had the chance to talk to a guy running a family owned oil mill in Germany. He said he sells 70% of his monthly production to Aldi. His net profits on that portion of his business was exactly 0%. That was basically the condition of Aldi to give their business to him.
But it gave him the capacity utilization to make the business work on his end. To have the necessary volume buying seeds etc. He made his money selling the same oil that he sold to Aldi, just with different brand names/labels and filling it into glass bottles instead of plastic bottles, for consumers that thought the higher quality veggie oil comes in glass bottles.
:eek: ?