While living in the Netherlands, we became familiar with the Aldi chain of discount grocery stores. Aldi is a German multinational, founded by the German billionaires Karl and Theo Albrecht. Aldi has stores in the States under the Aldi name and also has an up-market version called Trader Joe’s. Aldi is not yet in Canada but I expect they will eventually arrive here because their business model is so interesting and their groceries are so inexpensive. The nearest Aldi to us is in Niagara Falls, NY.
In North America, choice is important. If you want breakfast cereal, then the consumer is given dozens of choices of cereal — all supposedly differentiated from one another. In the Aldi world, this pattern is reversed and consumers are given extremely limited choice. In many product categories, there is only one offering. For example, if you want a dark chocolate bar, then there may be only be one dark chocolate bar on offer. The brand of this chocolate may not be familiar to you but usually the quality would be comparable, or superior, to brand-name products.
Definition of the Aldi Idea
The Aldi idea is that when shopping for groceries you don’t need to have the choice of dozens of similar goods; all you want is one quality product of at a reasonable price. As a result of this restriction of consumer choice Aldi can discount their prices (and reduce their costs) substantially.
The amount of groceries we could buy for 50 euros at Aldi in Rotterdam was substantial. As a result, grocery shopping for many items at Aldi seemed much more affordable than here in Canada. However, at Aldi the quality of fresh produce was much less than what we find at Lococo’s (a local Hamilton grocer).
The Aldi approach to retailing:
- Shoppers don’t need a large choice within each product category; they just need one high-quality alternative at a reasonable price
- Excessive choice, when it comes to groceries, does not bring happiness or empowerment, it brings confusion and unhappiness. This aligns with what the sociologist Barry Schwartz calls the Paradox of Choice
- Brand-name products are no better than generic alternatives if the quality of the generics is equal or superior
- Shopping at a discount grocery store is acceptable to shoppers of various incomes if the quality of the goods is not compromised
- Rules of retailing common to North America can be completely reversed and yet still produce incredible profits for multinationals
Applying the Aldi Model to other areas
Here, More is Less
- Corn-puff cereals
- Formulaic pop songs
- Sitcoms involving blended families
- Cars on the road
- People living on earth
Areas where the Aldi Model works less well
Here, More is More (or, the more the merrier)
- Books, Ideas
- Consumers for your books and ideas
- Cool little shops in your neighbourhood
- Keys you can play the piano in
- Types of ethnic restaurants whose foods you enjoy
