Pioneer of the cheap markets, Aldi: Who wrote this success story?

Aldi (Albrecht-Diskont) is a German chain of cheap food stores operating worldwide. It is managed from two separate centers Aldi Süd and Aldi Nord. The name Albrecht is the surname of the founding family, and Diskont means discount.

It started with a 35 m² shop established in Essen, Germany in 1913, run by the mothers of the brothers Karl Albrecht and Theo Albrecht. After the war, the two brothers took over the management of the shop from their mother. They then continued to expand, opening a larger shop in the Essen-Schonnebeck district. The number of shops they opened in 1950 reached thirteen. In 1960, when the two brothers separated and shared the shops Aldi Nord (North) and Aldi Süd (South), they had 300 shops and a turnover of 90 million Mark.

Company culture

The corporate culture at Aldi was formed by the role models of founders Theo and Karl Albrecht. There are no written explanations about company culture other than job descriptions. Although this culture is not written, it has continued and will continue until today due to its simplicity. At Aldi, everyone knows the direction to go. The management of the company strictly adheres to the principles that make up the corporate culture. The main characteristic of this culture is modesty.

Aldi (stylised as ALDI) is the common company brand name of two German multinational family-owned discount supermarket chains operating over 10,000 stores in 20 countries. The chain was founded by brothers Karl and Theo Albrecht in 1946, when they took over their mother's store in Essen. The business was split into two separate groups in 1960, that later became Aldi Nord, headquartered in Essen, and Aldi Süd, headquartered in Mülheim.

Aldi stores are designed in a simple and unpretentious way, far from pretentiousness. The head office and executive rooms are designed in the same way. The company vehicles used by the management level are selected from the middle class and their colors are not metallic.

Thrift is the second most important principle of the Aldi corporate culture. The understanding of avoiding unnecessary costs is dominant at all levels. Precautions such as using the back side of used papers, turning off the lights in the rooms when it is bright enough, using the old truck tires by covering them, reducing the friction with the air by installing pointed-nosed inserts in front of the trucks and saving fuel can be counted as examples.

Aldi has taken care to select its managers from subordinates in order to ensure the continuation of the culture without change. Thus, people who were already accustomed to this culture played an active role in maintaining it. It is an unwritten rule of the company that the managers stay away from the public as long as they work. No one is allowed to make a press release, even if it is useful for the firm or advertising. Celebrations such as New Year's Eve or company special days were rare.

Activities in large groups are avoided at Aldi. There were no tabloid events about the private lives of family members. Aldi has always hidden the aspects that give it a competitive advantage. The company took great care not to talk too much, especially to stay away from the public, and not to spread the myths and successes. 'Everything is for the customer' and 'Doing what needs to be done to achieve company goals' have been key elements of the strategy. Aldi has always taken great care to be an honest company that complies with all laws.

All the workflows of the company have been kept extremely simple. Simplicity and simplicity are the most important reasons for Aldi's easy and fast growth. Customer orientation did not remain in words, it was actually implemented. It is focused on accurately identifying customer needs and offering the best quality at the lowest price to the customer.

Management and organization at Aldi

At Aldi, there is a Management Committee at the top of the organization. Regional general managers work under the Management Committee. In addition, there is an administrative affairs manager, warehouse manager, and marketing manager who report to the general manager of each region. Depending on the size and importance of the area, he may also be the regional purchasing manager and store development manager. Regional general managers are the leaders of their regions. Each region also has its own warehouse. Job descriptions and numerical targets of all departments are clearly defined.

At Aldi, goals are surprisingly simple; The highest possible performance and productivity, the lowest possible selling prices, and the highest possible quality at the lowest possible costs in all areas. These are easy to understand even for those at the lowest level. These simple and understandable goals are permanent, applicable, and practical for each department and each employee.

One of the important applications in Aldi is 'testing in three stores. As a result of these tests, the success chances of new products or products whose packaging content has been changed are measured. Findings with high accuracy at a low cost are obtained thanks to these tests.

Stock management is also given great importance at Aldi. But this administration is carried out in a very simple way. The main principle is the 'what goes in' rule. The amount of a product on the shelf is determined as a weekly requirement. When the order day comes for the products in a store, the store manager places the order instead of the sold goods and the incoming goods are placed on the shelves again. Today, this process is carried out by automatic systems with the same logic.

Aldi also has a serious control system. In principle, every manager checks three tasks or subjects of his employees by sampling method every month.

Aldi's operating principles:

Aldi has always considered its competitors. However, he never shaped himself for them. It has always followed its competitors but has consistently gone its own way without trying to imitate other companies. The principles of Aldi's sales policy can be gathered in five basic points.

• Limited range of products.
• To form the product variety in a way that will meet the daily basic consumption needs of the customers.
• All the details about the products are known and there is a mastery of the production process.
• It is very important that the products are of the best possible quality to compete with the leading brands of the market.
• It should be the lowest possible selling price.

Aldi has always offered price advantages to its customers, as it has achieved high sales volumes with its limited number of products. If the price of a product drops due to costs, Aldi immediately reflects this decrease in its prices.

Quality is paramount

Quality has been the second most important success factor next to the low-price policy. The stable private label (PL) policy of quality products has brought success to Aldi. Approximately 95% of Aldi's products offered for sale consist of PL products that it produces on its own behalf. Most of these products are made by manufacturers of famous brands. No one else has been able to follow such a consistent policy in this policy.

Undoubtedly, frequent testing of PL products plays a major role in the success of this strategy. In the tests, it has been observed that many PL products are of higher quality than branded products.

A limited number of products, net purchase prices, no shelf entry fee

Aldi has avoided all kinds of demands that may bring additional cost to itself in terms of purchasing and has focused on the quality of the product and the net purchase cost. It works with its suppliers on the principle of 'live and let live. There are extremely open and honest relationships. Suppliers also trust Aldi and act very carefully not to lose Aldi. He tries to get the best purchase price he can buy. A shelf entry fee is not required. Discount systems are not used. The selling price, on the other hand, is not made by the purchaser. The highest management body of the enterprise, the 'Administrative Committee, plays a role in this regard.

Walmart failed completely and pulled out of Germany in 2006. ALDI opened its first store in New York in 2011.