Given Aldi’s natural reticence, a surprisingly detailed 2,000 word article in today’s Irish Times gives some useful insights into the Aldi business model, much of which can be applied to its UK operation.
The article describes Aldi as a logistical and ergonomic-driven machine, a finely-tuned operating model, where “everybody knows what they have to do, and how to do it”, which helps it keep costs to a minimum.
Moreover, its emphasis on exclusive surrogate labels means the packaging, the case it arrives in, the way it gets delivered and shipped to store in shelf-ready packaging, is all under Aldi’s control.
Also, just-in-case, mystery shoppers are employed at each store to ensure that theory is reflected in practice…
However, the fact that staff are paid at, or above the living wage, and the discounter is known as the best paying retailer in the market, means if the same policy holds in the UK, Aldi will not have to absorb the additional wage cost increases that will put additional cost pressures on UK mults when they have to comply with minimum wage legislation.
Methinks the discounter's competitive edge may be sharper than we thought...?
Much more detail in the Irish Times Article
The article describes Aldi as a logistical and ergonomic-driven machine, a finely-tuned operating model, where “everybody knows what they have to do, and how to do it”, which helps it keep costs to a minimum.
Moreover, its emphasis on exclusive surrogate labels means the packaging, the case it arrives in, the way it gets delivered and shipped to store in shelf-ready packaging, is all under Aldi’s control.
Also, just-in-case, mystery shoppers are employed at each store to ensure that theory is reflected in practice…
However, the fact that staff are paid at, or above the living wage, and the discounter is known as the best paying retailer in the market, means if the same policy holds in the UK, Aldi will not have to absorb the additional wage cost increases that will put additional cost pressures on UK mults when they have to comply with minimum wage legislation.
Methinks the discounter's competitive edge may be sharper than we thought...?
Much more detail in the Irish Times Article
2 comments:
Hi Brian,
Isn't it amazing that Aldi are shaping up to be the retailer that is most interesting, and is doing most to change the way the industry works? Far more than a discounter.
All the best,
Mike
Thanks Mike
I believe that much of Aldi's UK success has been due to being underestimated.
Their policy of secrecy/keeping a low profile therefore makes any advance even more surprising.
As you imply, under the bonnet,their simple business model is the most sophisticated one in town...
Other retailers would be unwise not to see Aldi's impact as being permanent, with little chance of reversal, should market conditions improve...
Brand owners meanwhile need to find ways into Aldi that do not compromise the brand...
KR
Brian
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