Aldi: The German retailer

Aldi History
1946: Karl y Theo Albert arrive from Russia and inherit the family store
1961: The two brother separate operations into Albrecht Nord and Albrecht Sud
1962: First Aldi (Albrecht Discount) store in Dortmund
1967: First store outside Germany (Austria)
1971: Theo Albrecht is kidnapped by a lawyer and his partner the Albrechts pay DM 7 million
1976: Aldi enters the United Sates of America
1994: Karl Albrecht hands over day-to-day business to Ulrich Wolters
1996: Aldi starts selling PCs
2000: Following differences on how to react to Wal-Marts entrance into the German market Aldi Sud
puts the Sud in its logo
2000: Aldi Sud starts using barcode scanners in its stores
Snapshots of Aldi
Family run business

Clients included German Chancellor Helmut Schmidt

Biggest retailer of PCs in Germany

One of the very few companies that has beaten Wal-Mart

Profit margin estimated to be 4% - in grocery retailing

The best known brand in Germany ahead of Mercedes and Coca-Cola

In its private label segments it owns 30% of the German grocery retail market
Finances
Sales

Margin Estimates

Payment terms

Other data

Labor cost
Sales per m2
Average sales
Finances
Sales: 40Bn in 2005
30% Aldi Nord, 30% Aldi sud, 40% International
CAGR 1997 2002: 15.2%

Margin Estimates
Aldi Nord 4.3%
Aldi Sud 6.2%

Payment terms
30 days
Other data

Labor cost: 3% of sales (vs. 5% or more in sectors)

Sales per m2: 7000 vs. 3,960 in the sector and 5000 for Lidl
Average sales: 4.9m per store (estimated investment 500,000 stores can finance growth)
Sales per store
Aldi Nod 7.0m

Lidl 4.9m

Aldi Nord 4.2m

Netto 3.2m

Penny 3.1m

Plus 2.4m
Simplicity
Lowest cost, high quality, most efficient operations

Trust reduces complexity

Avoid structures with unnecessary staff:

no HQ departments, for marketing, strategy, controlling or PR
Only purchasing , supply chain management and IT

Simple but reliable processes and limited assortment

Cart rental system
Pay for your bags
Aldi Supply Chain
Delivery Logistics
Bar code:
Why late?
Bar code is slower than original code system

Orders
5 times per week

Distribution centers
One per 50 to 80 stores
Most product cross-docked
40,000 employees and no unions but high satisfaction of employees
Operations
Inventory 7 days (52 turns per year) vs. 43 turns in Wal-Mart

Product Portfolio
600-700 SKU with total of 7,000 SKUs in the group
True purchasing power
INVENTORY MANAGEMENT
Inventory Management
Standardized

Bulky products delivered on pallets

Standard display between floor and price signs, attached to wall

Small products delivered in boxes, displayed on standardized shelves

Orders aggregated demand of stores processed at DC generate order list, confirmed by store employees quick not
need of IT Kanban

DC management periodically checks stores on impression, cleanliness, parking, price tags etc.
Price tags
Small boxes