How Aldi Does It

http://www.futureofcapitalism.com/2010/08/aldi-family

Spiegel has a long look at the very successful German family-owned retailer Aldi, best known in America as the owner of Trader Joe's. F.A. Hayek isn't mentioned, but his concept of the information that is contained in a price is very much on display:

Aldi is Germany, and Germany is Aldi. This sense of order, this devotion to efficiency, the sparse logic of logistics and above all, determined thrift.

So it's no wonder that Germany isn't just the land of poets and thinkers, but also of discount shopping. The concept of super cheap groceries wasn't invented in the United States, it was invented by the Albrechts. The concept had nothing to do with customer service, just with providing discount food for the masses. "Our advertisement is the cheap price," Karl Albrecht said in 1953. That remained the only public statement he made in the entire history of the company.

Aldization also meant ... unshakeable faith in the power of the market in all areas of life -- from discount airlines to discount burials.

...For the chain's own-label goods, which account for 95 percent of the product range, the bar codes were printed on every side of the packaging. The innovation meant that the cashier did not need to turn the product around to find the bar code, thereby speeding up the checkout process.

I shop sometimes at a Trader Joe's in New York and, from a customer's perspective, it is one impressive operation.

The Spiegel article doesn't get into the topic directly, but it's an interesting question whether Aldi's capital structure — family controlled, no public shareholders — provides it an advantage by allowing a focus on long-term results.

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by Editor  |  Aug 4, 2010 at 9:23 am Related Topics:  Europe, Hayek receive the latest by email: subscribe to the free futureofcapitalism.com mailing list