Strategic Selection: Less is More for Aldi

The Wall Street Journal: “German discounter Aldi, is betting billions it can win over spoiled American shoppers. How? By offering them fewer choices—way fewer—than rival retailers. The unlikely proposition has worked nearly everywhere Aldi has set foot … It offers a deliberately pared-down selection, sometimes a tiny fraction of the number of items sold by rivals, which helps Aldi cut costs to levels U.S. grocers can only dream of. Among other benefits, fewer items means faster turnover, smaller stores, less rent, lower energy costs and fewer staff to stock the shelves.”

“About 70 years ago, brothers Karl and Theo Albrecht, fresh from military service in World War II, took over their family’s store in Schonnebeck, a mining neighborhood of the bombed-out industrial city of Essen. In the early 1950s, they began rolling out their ascetic concept to other branches throughout the region. Back then, their stores offered just 250 items, the essentials miners’ and steelworkers’ families needed to survive—flour, sugar, coffee, butter, bacon, peas and condensed milk. In the 1950s and ’60s, Germany’s economic miracle took off, and a wave of glitzy supermarkets selling thousands of items sprouted up to serve the newly affluent middle class. Aldi didn’t flinch.”

Today: “Aldi is gambling it is more in tune with the American tastes, rolling out small, nimble stores instead of sprawling warehouses and supermarkets that take longer to navigate … One of Aldi’s strengths that has eluded many discounters is its ability to draw middle-class shoppers—those with more money to spend—despite its limited array of goods. It did this by cultivating the image of a company focused on quality rather than pinching pennies … There too, executives say, the limited assortment played a central role. The small number of items ensured that staff could carefully choose, taste-test and quality-control each item.”

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