German success stories – Aldi and Trader Joe’s

 
Aldi sign
 
Aldi came in the United States in 1976 but it was the 2008 financial crisis that increased its visibility. Aldi has been rewarded in 2014 as the 3rd most appreciated retailer in the US. Number 1 being Trader Joe’s. Both chains belong to the German Albrecht’s brothers who own ALDI, a famous brand of discount stores in Germany. After some business disagreements, they split Germany in two for Aldi Nord and Aldi Süd (South). Trader Joe’s is part of Aldi Nord. Aldi is part of Aldi Süd. But how to explain their success in the United States?
 
 

I have been living in the US since 2013. Moving there was a kind of short shot. My husband was offered a job and he couldn’t say no. When we arrived in Washington, DC, he was pleased to hear that Aldi was there too. Over the years, he had developed a kind of Saturday’s ritual, going to Aldi with our youngest son. Every single Saturday morning. So, in one of our first days in DC, we went to Aldi in the 17th Street instead of a museum. And it was exactly the same as in Germany: the size of the store, the parking lots, the shelves with open boxes and the Moser chocolate. His Saturday’s ritual was preserved.

Aldi in the United States

When Aldi came in the US in 1976, discount stores were unorganized supermarkets with expired products. Aldi is well-known in Germany for having introduced the concept of ZERO service for products at low prices. Today, it exports this concept around the world. In the US too. At Aldi, you need a quarter to get a shopping card. If you want your quarter back, you have to bring your card back at its place. Shopping bags are worth $ 0.10. Furthermore, the stores only accept cash payment or debit cards. For most Americans, a no go. But it works. Aldi has now about 1.300 stores in 32 states and plan to grow faster, opening 650 additional locations until 2018. In 2013, consumers ranked Aldi as the top-grocery chain for low prices.

Differences between Trader Joe's and Aldi

ComparisonTrader Joe'sAldi
OwnerGerman Aldi NordGerman Aldi Süd (South)
Positioning in the USNeighborhood specialty stores with a lot of organic foodTop quality at low prices
Number of supermarkets
(08/2014)
about 400,
50% in California
about 1.500
Average size750 to 1.100 m2900 to 1.000 m2
Number of sold items4.0001.300
Turnover$ 5.700 per meter$ 9.7 billions (2013)
Private labels90 %80 %
Nothing common between Trader Joe's and Aldi? Both chains belong to the German Aldi, an experienced discount stores chain. They sell on a quite small surface a lot of products under their own brand.

Trader Joe’s, a German supermarket?

The other German success story is the one of Trader Joe’s. It is a Californian grocery chain which has belonged to Aldi Nord since 1979. Trader Joe’s is a kind of organic and specialty supermarkets. Service is fully American and shopping at Trader Joe’s is a little bit cool.

Aldi and Trader Joe’s concepts’ are different. But both chains are successful. According to a study by Market Force Information, Trader Joe’s is North America favorite grocery retailer based on consumer satisfaction. Aldi ranked third. Both were lauded for their service and the quality of their private label brands. This was the second year in a row that Trader Joe’s ranked first.

Ranking of Favorite Grocery Store ChainsAldi’s success in the US

The financial crisis helped Aldi to succeed. During the following recession, Americans who lost their jobs or saw the depreciation of their real estate, had no choice but to go to Aldi. Yet, it is not a shame anymore to shop grocery at Aldi.

In May 2014, the Huffington Post compared the prices between Aldi, Walmart and Kroger. It published the results here (LINK). The 37 items shopping cart was at the cheapest at Aldi. However, low prices are not the only reason for Aldi’s success. The Times granted Aldi for its „exceptionally cleanless and well organization“. Before Aldi, discount stores were messy supermarkets with items with an expirated date. Private labels were packed in simple white boxes with a black label. Although Aldi and Trader Joe’s sell mostly private labeled products, their products are presented in attractive and colorful boxes, reminding sometimes of famous brands.

Trader Joe's pictureTrader Joe’s, an upscale Aldi for organic sensitive Americans

Shopping at Trader Joe’s is fun. Customers enjoy to buy in smaller stores with a reduced choice of products. They are packed in bright colorful boxes which are very different from the usual supermarkets’ items. Also the staff is extremely friendly. Other reasons to shop at Trader Joe’s are the organic fruits and vegetables prices. Trader Joe’s doesn’t see itself as an organic supermarket. According to Mark Mallinger, a university professor who has done research for the company and been cited in Fortune „they see themself as a national chain of neighborhood specialty grocery stores“.

When I went for the first time to Aldi, I was really surprised. We drove through poor neighborhoods where homeless people and drug addicts stood on the streets. The store itself was a huge contrast: almost new and very clean. Since that time, I traveled a lot in the US and saw many Aldi stores. Customers are merely Latin-Americans and African-Americans. At Trader Joe’s, shoppers are mostly white.

As far as I am concerned, I like to buy in both. My French roots love the cheese and other specialties at Trader Joe’s. I buy here all my organic food too. My German part loves the German weeks at Aldi. Then, I buy Spätzle which are eggs noodles, rye bread or peanuts chips.

My husband is not driving to Aldi anymore. It is too far away from our home. But if he has the chance to shop there, then he would always bring our youngest son to keep on with the tradition.

This is only a summary. If you have any questions, please feel free to contact me.

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2 Comments

  • If you want rudeness and nastiness with your groceries, by all means shop at ALDI USA. Their untrained, uncouth staff will serve you a doses of rudeness, cattiness, whilst you’re paying them for it. NO ALDI, NO..NO…It’s your money, you don’t have to give it to a grocery chain which does not put great customer service at the top of its list. Customers keep your business flowing and successful through repeat business and word of mouth. Your staff/cashiers reflect who you are as a company. They’re the first point of contact with your customers. If they’re poorly trained, it will reflect in how they treat your customers.

    • Thank you so much for this comment! ALDI is known for its low service level. I buy sometimes at ALDI in Silver Spring. I never experienced there rudeness or nastiness.

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